Clothing retail giant Macy's (NYSE:M) spent much of 2020 limping along, but signs of a comeback were cropping up the farther from March 2020 we got. Earlier today, Macy's reported a profit for the first quarter and surged 6% in premarket trading. Not only did the company turn in nearly double what was expected, going positive instead of negative on earnings, but the company also turned in a beat on revenue and improved its full-year guidance. Analysts, meanwhile, are urging caution on putting further investment into Macy's.
Inside Macy's Surprise Earnings Report Win
The Macy's earnings report delivered a substantial win, mostly by virtue of being nowhere near as bad as expected. Where Refinitiv analysts were looking for a loss of $0.41, Macy's instead posted earnings of $0.39 per share. That also compares wonderfully to this time last year, when the pandemic was just getting started; back then, Macy's posted a quarterly loss of $11.53 per share.
Revenue offered up a similar win; while Refinitiv's consensus was looking for $4.37 billion in revenue, Macy's posted $4.71 billion for the quarter.
Macy's also posted some exciting information on its other metrics; the company reported adding 4.6 million customers to the quarter, which is not only well above last year's pandemic-skewed numbers, but also a 23% increase from the same time in 2019. Nearly half of those purchasers, 47%, were shopping online, and online sales in general made substantial upward progress. Digital sales were not only up 34% against this time last year, but were also up 32% from levels seen in 2019. Ecommerce operations represent 37% of net sales for Macy's, which is down 6% against this time last year—when the only sales were online—but an increase of 13% from 2019's first quarter, reports noted.
Perhaps best of all for Macy's and its investors, the company revised its full-year guidance. Net sales for the 2021 fiscal year were originally projected to come in at $19.75 billion to $20.75 billion. Now, Macy's looks for $21.73 billion to $22.23 billion to come in. Macy's CEO, Jeff Gennette, made it quite clear that he doesn't expect the numbers to represent a one-time affair, and reports note that the company is looking to expand its offerings and take advantage of the pent-up demand that's hitting the markets on certain levels even now.
What are Financial Analysts Saying About Macy's Stock?
Macy's stock forecast, based on our latest research of the financial analyst community, is looking fairly cautious going forward. The consensus rating is currently a “hold”, which represents an improvement over the consensus “sell” seen back in November 2020, and there are signs of increasingly bullish sentiment surrounding Macy's.
A year ago, Macy's had one “buy” rating, four “hold”, and nine “sell” ratings to its credit. Six months ago, that shifted to one “buy”, four “hold” and 10 “sell”. Three months ago, bullish sentiment started to swing in, as the company improved to two “buy”, three “hold” and eight “sell.” Today, we're at two “buy”, two “hold” and seven “sell”. Improvement may be gradual, but it's visible.
Macy's price target is holding in a fairly narrow range. The current average of $10.50 per share is held in by a high of $16 and a low of $3. Stale listings also seem to be unduly hurting Macy's here; that $3 price target goes back to July 2020 from UBS Group. Meanwhile, that $16 high is much more recent, posted by JPMorgan Chase & Co. back in April 2021. It's actually the most recent analyst move noted so far, and it's part of a string of wins for Macy's stock news in 2021. So far this year, out of the six analyst moves made, five have featured increased price targets. The only one that didn't, HC Wainwright, just reiterated its “buy” rating with no price target connected. With Macy's currently trading at $19 a share, there does seem to be some downside risk involved, but with even the newest price target six weeks old, it may be more a matter of price targets needing revision.
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