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Nordstrom Stock: What’s in Store for Investors?
Stock Analysis & Ideas

Nordstrom Stock: What’s in Store for Investors?

Shares of department store operator Nordstrom (JWN) are under fire, declining nearly 25% in two trading days.

The sell-off in Nordstrom stock follows the retailer’s Q2 earnings announcement that didn’t sit well with the investors. I am neutral on the stock. (See Nordstrom stock charts on TipRanks)

Notably, Nordstrom delivered better-than-expected Q2 results wherein sales and earnings exceeded estimates. However, its revenue and earnings lagged pre-COVID levels.

Net sales were $3.57 billion in Q2, compared to $3.78 billion in the second quarter of 2019. Furthermore, its diluted earnings per share of $0.49 reflect a decline of 50% from the comparable period in 2019. 

Nevertheless, Nordstrom raised its full-year revenue growth rate to more than 35%, compared to its previous growth guidance of 25%. Furthermore, EBIT margin is projected to be in the range of 3-3.5%, compared to the earlier guidance of 3%.

In response to Nordstrom’s Q2 earnings, Stephanie Wissink of Jefferies highlighted the company’s improving store traffic, and sequential improvement in growth. She has a Buy rating on Nordstrom stock, with a price target of $48 that represents 68.4% upside potential. 

Wissink views management’s guidance as “conservative and beatable.”

Overall, the majority of the Street is sidelined on JWN stock. The company’s Hold consensus rating is based on two Buys, three Holds, and three Sells. The average Nordstrom price target of $37.13 implies 30.2% upside potential to current levels.

While the Street has a Hold rating consensus, hedge fund managers have been adding JWN stock. TipRanks’ Hedge Fund Trading Activity tool indicates hedge funds have increased their holding by 471,400 shares shares during the last quarter. 

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

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