TJX - UBS sees over 40% downside for Nordstrom stock amid inflationary pressure

Nordstrom ( NYSE: JWN ) stock is likely to slump as inflation and decelerating sales trends stand to weigh on shares, according to UBS analyst Jay Sole.

In a note to clients reiterating his bearish “Sell” rating on the stock, Sole advised that the Swiss bank’s proprietary surveys suggest the retailer will continue to lose market share as overall industry sales slow. Per the survey, Nordstrom ( JWN ) was not widely viewed as “good value for the money” as compared to peers. In fact, only Dillard’s ( DDS ) scored lower, while Ross Store's ( ROST ) topped the survey.

“We think the Street underestimates pressure on JWN earnings from share loss as consumers' move to online pureplay channels, retailers with better value-for-money propositions such as [TJX Companies] ( TJX ), and brands' own stores and websites,” he said. “We think many underestimate how difficult it will be for JWN to re-leverage fixed costs.”

Sole set a $12 price target on the stock alongside his “Sell” rating, suggesting about a 43% downside for the stock from Friday’s close. Shares fell 1.47% in premarket hours, extending an over 40% slide in the past year.

Read more on Morgan Stanley’s best and worst picks among retailers .

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