UBS sees over 40% downside for Nordstrom stock amid inflationary pressure
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Nordstrom (NYSE:JWN) stock is likely to slump as inflation and decelerating sales trends stand to weigh on shares, according to UBS analyst Jay Sole.
In a note to clients reiterating his bearish âSellâ rating on the stock, Sole advised that the Swiss bankâs proprietary surveys suggest the retailer will continue to lose market share as overall industry sales slow. Per the survey, Nordstrom (JWN) was not widely viewed as âgood value for the moneyâ as compared to peers. In fact, only Dillardâs (DDS) scored lower, while Ross Store's (ROST) topped the survey.
âWe think the Street underestimates pressure on JWN earnings from share loss as consumers' move to online pureplay channels, retailers with better value-for-money propositions such as [TJX Companies] (TJX), and brands' own stores and websites,â he said. âWe think many underestimate how difficult it will be for JWN to re-leverage fixed costs.â
Sole set a $12 price target on the stock alongside his âSellâ rating, suggesting about a 43% downside for the stock from Fridayâs close. Shares fell 1.47% in premarket hours, extending an over 40% slide in the past year.
Read more on Morgan Stanleyâs best and worst picks among retailers.