After withdrawing guidance in its previous earnings report, Kohl’s Corporation ( NYSE: KSS ) offers a balanced risk/reward for investors ahead of its Q4 results, according to UBS analyst Jay Sole.
He noted that low expectations for the company could aid results while a new CEO in Tom Kingsbury adds uncertainty to guidance. Sole sees guidance into 2023 as the key factor for the potential stock reaction on March 1.
“It is unclear what Mr. Kingsbury's approach to guidance will be. Our view is Kohl's fundamentals are weak and will deteriorate over the course of FY23,” he wrote. “However, KSS may not share that view and thus could guide in a number of ways.”
He added that an over 30% surge for the stock to start 2023 should be taken as a bullish signal. However, Sole reiterated a Sell rating on the stock based upon still deteriorating fundamentals. Sole assigned an $18 price target to the stock, suggesting significant downside for the stock over the next twelve months.
The options market is implying a 6.7% move for the stock on earnings. Read more on the earnings expectations for the Wisconsin-based retailer .
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Kohl’s risk/reward balanced ahead of March 1 earnings - UBS