Benzinga - Morgan Stanley analyst Alex Straton recently changed his view on retail stocks, specifically specialty retailers. Here’s what investors need to know.
The URBN Takeaways: Straton said he is becoming increasingly bullish on Urban Outfitters, Inc (NASDAQ:URBN). He upgraded the stock to Overweight from Equal-Weight, and raised the price target to from $27 to $41.
Urban Outfitters’ 2023 earnings forecasts are conservative. Straton also noted its low relative valuation compared to peers, which skew the risk-reward scenario to the upside.
The CPRI Takeaways: Straton downgraded Capri Holdings Ltd (NYSE:CPRI) to Equal-Weight from Overweight. He also lowered the price target from $55 to $40.
The potential for negative EPS revision risk in the near term overshadows a clear long-term valuation re-rating opportunity, Straton says.
The JWN Takeaways: Straton reiterated an Underweight rating, and a $16 price target for shares of Nordstrom Inc (NYSE:JWN).
The analyst said Nordstrom reflects risk across multiple variables, leading to more conviction in its underweight rating.
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The BBWI Takeaways: Straton reiterated an Underweight rating, and a $61 price target for shares of Bath & Body Works Inc (NYSE:BBWI).
According to Straton, Bath & Body stands out for its achievable 2023 earnings forecasts and its potential for further re-rating. The company also boasts a favorable ranking within the equity strategy team’s trade idea framework.
The LULU Takeaways: The analyst also reiterated an Underweight rating, and a $424 price target for shares of Lululemon Athletica (NASDAQ:LULU).
Similar to Bath & Body, Lululemon stands out for its conservative 2023 earnings forecasts and the possibility for further re-rating.
The Overall Take: Morgan Stanley’s U.S. equity strategists foresee a meaningful earnings recession in 2023, ahead of a sharp rebound in 2024.
The analyst recommends owning defensive stocks with operational efficiency and earnings stability.
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Latest Ratings for LULU
| Jan 2022 | Barclays | Maintains | Overweight | |
| Jan 2022 | Morgan Stanley | Maintains | Equal-Weight | |
| Jan 2022 | Telsey Advisory Group | Maintains | Outperform |
View the Latest Analyst Ratings
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