Kohl’s stock decline could be good for investors

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  • Stock fall could attract investors
  • Rivals’ woes might help
  • Analysts give their support

Shares of department store retailer Kohl’s fell as figures revealed year-end holiday season sales that were slower than expected. On Wednesday, the stock closed at its lowest point and has since suffered a further 10% drop.

Other major U.S. retail names, such as Macy’s, have also seen stock dipping significantly, dragging down the S&P Retail sector in the process.

However, some analysts and investors believe that the current situation for Kohl’s could present a good opportunity rather than a setback.

Cowen analyst Oliver Chen wrote in a research note: “KSS remains Cowen’s favorite department store pick as we believe the retailer is further along in making changes to its business given the retailer’s more mature loyalty program, attractive product exposure, better positioned store base, and digital excellence.”

“Cowen is surprised by the stock weakness [on Thursday] as comps were overall robust and updated FY18 guidance was above the Street,” Chen added.

Sticking to a “Buy” rating at a price target of $82, Chen suggested that he saw a significant upside to the stock’s current woes.

Another analyst, Jefferies’ Randal Konik, said that the weakness the stock showed on Thursday was actually a good reason to buy into it.

“We are buyers given traction in proprietary brands, share gains from peer closings, thoughtful traffic-driving partnerships with Amazon, omni initiatives and favorable off-mall real estate,” Konik wrote.

“We see inventories remaining lean and turns increasing while foot traffic should improve as competitors close doors,” he explained, while setting a more aggressive price goal than Chen at a share target of $95.

The problems that retail rivals Sears are currently dealing with could also be good news for Kohl’s, which represented more than $11 billion in sales over the past year. Any additional sales sent its way by Sears’ liquidation would add to the bump it received from Toys R’ Us’s exit from the retail marketplace.

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam