JP Morgan (JPM) had a happy call to make today. When the bank recommended selling Macy’s (M) two and a half months ago, the stock was up above $25. Now that the stock has has tanked to about $15, JPM says you can stop shorting it:
We are covering our short call on Macy’s following the stock’s precipitous drop over the past few months. To this end, since the end of April the stock has compressed 38.4% versus SPX (off 10.5%). While we still think the company’s divisional integration holds a high degree of risk and that 2H08/2009 Street estimates are too high (see below); the stock at $15.58 appears to be more accurately discounting these issues today (than ~2.5 months ago). Accordingly, we’re upgrading Macy’s from Underweight to Neutral.
JPM, however, does not believe the risks are behind Macy’s. Tough comparables, more competition from Saks (SKS) and Nordstrom (JWN), and integration issues (Spring 2009 merchandise will reflect the first purchasing decisions of buyers/planners who were less familiar with those locales previously) still make this stock unattractive.
JP Morgan upgrades Macy’s (M) from Underweight to NEUTRAL.