Zinger Key Points
- Morgan Stanley boosts Urban Outfitters to Overweight, citing conservative 2023 earnings estimates and attractive valuation.
- Straton holds Bath & Body Works at Overweight, spotlighting realistic 2023 forecasts and potential for further market re-rating.
Morgan Stanley analyst Alex Straton recently changed his view on retail stocks, specifically specialty retailers. Here’s what investors need to know.
The URBN Takeaways: Straton said he is becoming increasingly bullish on Urban Outfitters, Inc URBN. He upgraded the stock to Overweight from Equal-Weight, and raised the price target to from $27 to $41.
Urban Outfitters’ 2023 earnings forecasts are conservative. Straton also noted its low relative valuation compared to peers, which skew the risk-reward scenario to the upside.
The CPRI Takeaways: Straton downgraded Capri Holdings Ltd CPRI to Equal-Weight from Overweight. He also lowered the price target from $55 to $40.
The potential for negative EPS revision risk in the near term overshadows a clear long-term valuation re-rating opportunity, Straton says.
The JWN Takeaways: Straton reiterated an Underweight rating, and a $16 price target for shares of Nordstrom Inc JWN.
The analyst said Nordstrom reflects risk across multiple variables, leading to more conviction in its underweight rating.
Read also: GameStop Stock Is Surging: What’s Going On?
The BBWI Takeaways: Straton reiterated an Underweight rating, and a $61 price target for shares of Bath & Body Works Inc BBWI.
According to Straton, Bath & Body stands out for its achievable 2023 earnings forecasts and its potential for further re-rating. The company also boasts a favorable ranking within the equity strategy team’s trade idea framework.
The LULU Takeaways: The analyst also reiterated an Underweight rating, and a $424 price target for shares of Lululemon Athletica LULU.
Similar to Bath & Body, Lululemon stands out for its conservative 2023 earnings forecasts and the possibility for further re-rating.
The Overall Take: Morgan Stanley’s U.S. equity strategists foresee a meaningful earnings recession in 2023, ahead of a sharp rebound in 2024.
The analyst recommends owning defensive stocks with operational efficiency and earnings stability.
Next: Surprise Dip In May Inflation Raises Hopes For Pause In Fed Rate Hikes
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
