Monday, February 04, 2008

Kohl's Corp. (NYSE:KSS): Some colour on analyst action

We have couple of firms out with interesting comments on Kohl's Corp. (NYSE:KSS):

- Goldman Sachs is adding Kohl's to the Americas Conviction Buy List, upgrading the stock from Neutral. Department store stocks look more compelling on the heels of firm's economists' upwardly revised GDP and consumer spending 2H forecasts due to aggressive Fed cuts and a larger-than-expected fiscal stimulus package. KSS has remained flat ytd while most department store stocks have rallied 8%-10%. KSS should not only catch up as it is poised to capitalize on the same fiscal and monetary benefits, but they see mean reversion opportunity across its multiple and margin to drive 15% upside potential to our new 12-month $53 price target (from $43 previously).

- Piper Jaffray notes Kohl's ended FY09 with three consecutive months of price compression. The month of January marked the end of a difficult holiday season with KSS advertised apparel prices down 1.0% with similar declines in Nov. and Dec. Firm noticed price declines on roughly 11% of the items in our survey for the month of January offset by 4% of items with price increases.Notes specific weakness in women's performance apparel bottoms, private label denim and men's sport coats. While prices on comparably priced items were down slightly, they believe clearance markdowns were the story for the month of Jan. Initial read for the month of Feb. and FY09 shows Kohl's maintaining page counts and improving prices modestly.

- Thomas Weisel downgrades KSS to Market Weight from Overweight.

Notablecalls: Now, while my brain is telling me GSCO is a tier-1 firm with lots of big clients ready to jump into their Conivction List calls, my gut tells me the tiny TWP has potential to kill the rally. So, my game plan would be to look for a quick shorting oppy if the stock opens up more than say $1. GSCO may be right L-T but the N-T movements will not be based on fundies.

Everyone jumped into retailers for the refinancing rally and the time to bail is when the big guns go positive. Hope you get my drift.

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