Morgan Stanley Reports on Macy's

Morgan Stanley commented on Macy's M in a report released yesterday. In the report, Morgan Stanley was positive in its assessment of the company. Morgan Stanley writes, "While upward EPS revisions have driven share +18% MTD (and we see more positive revisions ahead), we expect multiple expansion to contribute to the next leg up in M shares as the retailer transitions from a debt paydown to a shareholder return story. Our $33 PT assumes 12x our 2012e EPS of $3.05 (Street $2.81) discounted back to today (vs. current 11x multiple). May Sales Still Solid: Despite unfavorable weather (the coldest May in 9 yrs and the wettest in 10), Hoguet reiterated commentary made on the 1Q call. Specifically, the company expects May to be the strongest comp of 2Q based on calendar and compares. MS May comp est. +5% vs. Street's +4%." Morgan Stanley has an Overweight rating on Macy's and a price target of $31 to $33. Shares of Macy's closed at $28.29, down from $28.86 at the open.