Deutsche Bank Reiterates Buy Rating on Kohl's (KSS)

Deutsche Bank is out with a research report this morning, where it reiterates its Buy rating on Kohl’s KSS; it has a $67.00 price target on the stock. The DB analysts cited the company’s high cash balance of $2.5 billion, which has been driven by solid operating performance, gaining of market share, gaining same store sales, as well as leading square footage growth with margin recovery and expansion. The analysts believe KSS is in a position to now employ stock buybacks and dividends, which should accelerate investor returns and spur P/E expansion. They believe the NTM total yield will reach approximately 8%. As for valuation, the analysts noted, “KSS trades at 12.8x our FY10 est of $3.64 and 11.1x our new FY11 est of $4.17, a discount to its 5-yr CY ave P/E of 17x and 5-yr FY ave P/E of 15x. Our $67 PT is based on 16x our FY11 EPS est, in-line with the company’s 1-yr avg CY multiple, which we feel is appropriate given accelerating sales momentum, sq ft growth, and opportunity to expand margins on systems & ex-commerce investments and penetration of private & exclusive brands.”