On Tuesday, CFRA, a prominent market research firm, raised its price target on shares of Macy's (NYSE:M) to $19.00, up from the previous $18.00, while maintaining a Hold rating on the stock.
The adjustment to the price target reflects a valuation of 7.2 times the firm's fiscal year 2025 (ending January) earnings per share (EPS) estimate, aligning with Macy's five-year average forward price-to-earnings (P/E) multiple of 7.0 times.
The firm has also increased its EPS estimates for Macy's, citing a $0.15 rise for fiscal year 2025 to $2.65, and a $0.20 increase for fiscal year 2026 to $2.80.
Macy's recently reported a normalized EPS of $0.27 for the first quarter, compared to $0.56 in the same period last year, which was $0.10 higher than consensus estimates.
Revenue for the quarter was reported at $4.85 billion, slightly above the $4.98 billion anticipated and $33 million more than consensus estimates.
Macy's performance by brand showed mixed results in the first quarter. Comparable sales at Macy's brand stores saw a slight decline of 0.4% year over year, while Bloomingdale's experienced a modest increase of 0.3%, and Blue Mercury saw a more significant rise of 4.3%.
Despite these varied results, the merchandise margin faced a compression of 100 basis points year over year due to increased markdowns on warm weather products.
The company's merchandise inventory saw a year-over-year increase of 1.7%, which, according to Macy's management, is well-positioned for the upcoming summer season.
Furthermore, Macy's revised its full-year sales guidance, raising the lower end slightly, and adjusted its EPS guidance range to $2.55 to $2.90.
However, the adjusted EPS remained at half of what it was a year ago, leading CFRA to consider the raise in guidance as almost insignificant and to view the shares as fairly valued at this time.
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