Kohl’s ( NYSE: KSS ) could still carry higher in the long-term despite a steep slide in shares as of late amid the evaporation of M&A prospects and rising recession risks, per Guggenheim.
Analyst Robert Drbul wrote in a note to clients that he is undoubtedly disappointed with recent performance for the stock. Additionally, he recognized that revenue and EPS estimates are in need of tempering. However, he stopped short of revising his bullish thesis on shares, advising investors should not yet lose faith.
“We remain optimistic about the company's commitment to its strategic plan and expect Kohl's Board to remain open to any opportunities to maximize shareholder value, including share buyback and real estate monetization,” he wrote.
Drbul added further that he remains confident in both CEO Michelle Gass and CFO Jill Timm as they navigate the current market environment. He pointed to their performance amid unprecedented COVID impacts as a positive indicator, while partnerships with Sephora and Amazon add upside should those initiatives continue to drive traffic in a post-COVID economy.
“We continue to believe that the path forward set by CEO Michelle Gass and CFO Jill Timm holds significant potential,” Drbul concluded. “While department store sector dynamics remain challenging, we remain optimistic on the various top-line initiatives underway, and we believe that the company continues to work to reinvent itself.”
He reiterated his “Buy” rating on shares, but cut his price target to $44 from $68 as he reeled in revenue and EPS estimates for the upcoming quarter significantly.
Read more on Credit Suisse’s more skeptical view .
For further details see:
Guggenheim defends bull case for Kohl’s despite FRG deal collapse