Macy’s (NYSE: M) stock will rise on improving consumer spending and apparel sales, according to one Wall Street firm.
Susquehanna raised its rating to positive from neutral for Macy's shares, predicting the retailer will report earnings above expectations this fiscal year.
"We now believe that Macy's has upside potential to conservative earnings guidance as the fundamental strength from current initiatives are carrying through, which should deliver a parade of beat-and-raise quarterly earnings reports though FY18," analyst Bill Dreher said in a note to clients Monday.
"Historically, this is a very cyclical business and investors looking to benefit from the improving consumer spending environment, and the strong fashion cycle, should consider Macy's more closely."
Dreher raised his price target for Macy's shares to $43 from $25, representing 24% upside to Monday's close.
The analyst estimates the retailer will generate fiscal 2018 earnings per share of $3.85 versus the Wall Street consensus of $3.75. He noted Macy's international tourist sales rose nearly 10% in its first quarter.
Last week, the chain’s board of directors declared a regular quarterly dividend of 37.75 cents per share on Macy's common stock, payable July 2, to shareholders of record at the close of business on June 15.
Macy's shares are outperforming the market this year. Its stock is up 37% year to date through Monday versus the S&P 500's 2% return.
The shares fell, though, $1.24, or 3.6%, to $33.38, first thing Tuesday morning.
