JP Morgan has added Kohl’s (KSS) to its focus list, upped estimates, and sees the possibility for a 25% return. The retail environment may be weak, but JPM reminds us the market is all about the expectations game (see: GM’s Auto Sales):
While we respect the scepticism surrounding the consumer, we think Kohl’s has set the bar low enough for 2008…to capture this risk. This point, coupled with improving June trends MTD (+2%), leads us to believe that Street EPS estimates at KSS may have bottomed for 2008.
JPM also leaves room for some upside in the form of share buybacks not even incorporated into their analysis:
Unlike peers JCPenney and Macy’s (both of which are not buying back stock today), Kohl’s has roughly $2 billion remaining on its Board approval. With this in mind, provided the pullback in the stock over the last month, we wouldn’t be surprised to see the company in the market today. Importantly, such activity is neither in our estimates nor company guidance – hence upside.
JP Morgan has added Kohl’s (KSS) to its focus list, target $50.
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