Kohl’s Financial Challenges and Strategic Risks Lead to Sell Rating

Morgan Stanley analyst Alexandra Straton maintained a Sell rating on Kohl’s (KSS – Research Report) on May 30 and set a price target of $5.00.

Alexandra Straton’s rating is based on several concerns regarding Kohl’s financial outlook and strategic challenges. Despite Kohl’s outperforming its pre-announced first-quarter earnings expectations, Straton highlights the company’s fundamental issues, such as a year-over-year sales decline and operating margins significantly below 2019 levels. These factors contribute to her skepticism about the company’s ability to successfully navigate its turnaround strategy.
Straton also points to potential risks associated with tariffs, which could negatively impact Kohl’s earnings per share in the future. Additionally, the recent CEO change is seen as a factor that may prolong the company’s turnaround efforts. The stock’s current valuation, trading at over 20 times the price-to-earnings ratio based on 2025 earnings guidance, presents a de-rating risk. Furthermore, uncertainties around consumer preferences and greater liquidity risks compared to peers reinforce her Sell rating, with a price target set at $5.

In another report released on May 30, Bank of America Securities also reiterated a Sell rating on the stock with a $7.00 price target.