Shares of Kohl’s (KSS) fell nearly 4% on Wednesday after UBS analyst Jay Sole downgraded the stock to Sell from Hold, as the pandemic continues to weigh on its financials. Moreover, Sole sliced his price target to $14.00 (35% downside potential) from $17.50.
Sole pointed out that the COVID-19 pandemic has severely disrupted the physical store platforms and the ill-effects are likely to continue even when the economy returns to normal.
The pandemic has altered the way people shop. The significant shift from brick-and-mortar stores to online has dented the operations of retailers like Kohl’s. The rising e-commerce wave is leading to store closures and disappearing third-party brick-and-mortar platforms, said Sole.
According to Sole, “the market does not fully appreciate how much covid-19 will permanently disrupt the retail landscape.” He further added, “To deliver steady long-term growth, we believe brands can no longer rely on malls or department stores to drive traffic. Brands have to generate their own audiences and become destinations.”
Overall Kohl’s shows a Hold Street consensus, with 3 analysts suggesting a Buy, 5 analysts recommending a Hold and 2 analysts have a Sell. The average analyst price target stands at $21.30, implying a potential downside of about 1%. (See KSS stock analysis on TipRanks).
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