It's time for investors to go long on shares of Macy's (NYSE: M), according to Evercore ISI, as classic brands and retailers finally innovate their way into the digital era.
Analyst Omar Saad, who "double-upgraded" his rating on shares of the iconic department store to "long" from "short" over the weekend, said that Wall Street's fear about a "retailpocalypse" stemming from Amazon's ascent are overblown.
"In a nutshell, we are convinced that old-world brands and retailers are figuring out how to manage inventory and market to consumers in the digital era, a critical turning point for the sector," Saad wrote in a note published Sunday.
"Macy's and others will have equal opportunity in the coming years to compete for the attention of discretionary consumers given a core set of competitive advantages that are not going away."
Saad said access to better brands, low-to-no-cost prime real estate that could serve double duty as local distribution centers for e-commerce order, and a household name franchise all spell upside for the company.
Macy's said it acquired New York-based concept shop Story earlier this month in one of its latest attempts to develop brands that resonate with customers.
The analyst raised his 2018 earnings per share estimate to $3.15 from $2.95 and his 2019 estimate to $3.40 from $3.10.
Shares of Macy's rose 51 cents, or 1.4%, to $36.07 in early Monday trading following Saad's bullish note, poised to add to a 41% climb so far this year.
