JPMorgan On Kohl's Upgrade: 'Rare Large Cap Value Idea'

Despite gaining 70 percent over the past six months, Kohl's Corporation KSS's stock is still underperforming the S&P 500 index by 30 percent over the past three years.

But according to Wall Street's newest bull analyst, the company should be viewed as a "rare large cap value idea."

The Analyst

JPMorgan's Matthew Boss upgraded Kohl's' stock from Neutral to Overweight with a price target boosted from $51 to $72.

The Thesis

Kohl's should be considered a "rare large cap value idea" within the retail landscape as it boasts an attractive core customer in the $75 to $80,000 salary range, Boss said in a note. The company's store fleet mostly outside of the shopping mall makes it well positioned to deliver on operational and traffic initiatives and deliver a high-single to low-double-digit earnings per share growth rate.

Kohl's underlying comp has improved quarter-over-quarter for four straight quarters, mostly due to management's focus on e-commerce penetration, buy-online-pick-up-in-store, a focus on the active and wellness category, among others, the analyst said. As such, the company has now laid out the foundation for multi-year growth but there are three factors that drive even higher upside, including the recent partnership with Amazon.com, Inc. AMZN, market share gain from rivals closing their stores, and a boost in the American middle class.

Price Action

Shares of Kohl's hit a new 52-week high of $65.06 and was seen trading higher by nearly 4 percent Friday.

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Image Credit: MB298 (Own work) [CC BY-SA 4.0], via Wikimedia Commons