Morgan Stanley raises price target for Nordstrom

Morgan Stanley says the second quarter was as good as it gets for Nordstrom this year.

On Thursday, the retailer reported second-quarter results that topped Wall Street estimates on both the top and bottom lines. It earned an adjusted $0.95 a share on revenue of $4.07 billion, easily beating the $0.85 and $3.96 billion that Wall Street analysts surveyed by Bloomberg were expecting. 

Nordstrom also raised both its full-year adjusted earnings guidance and revenue guidance. The retailer now sees full-year earnings of between $3.50 and $3.65 a share and full-year revenue of $15.4-$15.5 billion. 

Shares are trading up more than 11% on Friday — to their best level since December 2016. Still, Morgan Stanley’s underweight on the stock, raising its price target to $47, 11% below where shares closed on Thursday.  

“We expect 2Q will be the strongest quarter in 2018 and remain UW,” analysts from Morgan Stanley wrote in a note sent out to clients on Friday. 

They added, “We still expect 400 bps of sequential comp deceleration in 3Q (flat 3Q vs. +4% 2Q) and though we remain Underweight, we are encouraged by JWN’s 2Q results.” 

After crunching the numbers, Morgan Stanley says it has a new full-year earnings estimate of $3.51 (vs. $3.35 prior), which raises the following years by $0.20 apiece. 

That gives them earnings of $3.50 a share in 2019 and $3.80 a share in 2020-2022, versus their previous estimates of $3.30 and $3.60 respectively. 

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