After shares of Outperform-rated Macy’s (NYSE:M) rocketed higher on Tuesday following a consensus-beating Q2 earnings report, Evercore ISI sees much more upside potential for the stock.
Highlights for Macy’s (M) include the fact that occasion-based categories are still doing well, and the credit card business increased somewhat without actually showing symptoms of trouble, according to analyst Omar Saad. After the operator of the department store chain appeared to coast through the summer in a stronger position than many of its competitors, Macy’s (M) management is reportedly keeping an eye on inventory going into the holiday season.
While Saad and team believe that Macy’s (M) slower sales trend is more a result of COVID winning categories like soft home, active, casual, and sleepwear giving back those momentary gains, strength with occasion-based spending trends with career, tailored sportswear, fragrances, shoes, dresses, and luggage implies the slowdown could not be purely macroeconomic.
Compared to before, Macy’s (M) is said to be a lot more effective, nimble, and data-driven.
In what it refers to as its spending-shift-not-a-consumer-recession thesis, Evercore is particularly adamant. However, the firm raked in 2022 and 202 EPS projections due to mounting macro risks to consumer spending as well as increased sector-wide promotions in COVID-winning categories. These updated forecasts also resulted in a lower price target of $30, which is 7X the updated 2023 EPS estimate and represents an implied share price growth of more than 50%.
Webcasts and conference calls
Today, August 23, 2022, at 8:00 a.m. EDT, Macy’s, Inc. will hold a conference call with analysts and investors to discuss its second quarter 2022 sales and earnings. The media and general public can access the webcast and related presentation from Macy’s, Inc. by visiting the business’ website at www.macysinc.com/investors.
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Author Jowi Kwasu 
