MORGAN STANLEY: We just witnessed Nordstrom's strongest quarter of the year

  • Nordstrom‘s second-quarter results beat on both the top and bottom lines, sending shares up more than 11%.
  • “We expect 2Q will be the strongest quarter in 2018,” analysts from Morgan Stanley said.
  • Morgan Stanley raised its price target to $US47 – 11% below where shares settled Thursday.
  • Watch Nordstrom’s stock price in real-time here.

Morgan Stanley says the second quarter was as good as it gets for Nordstrom this year.

On Thursday, the retailer reported second-quarter results that topped Wall Street estimates on both the top and bottom lines. It earned an adjusted $US0.95 a share on revenue of $US4.07 billion, easily beating the $US0.85 and $US3.96 billion that Wall Street analysts surveyed by Bloomberg were expecting.

Nordstrom also raised both its full-year adjusted earnings guidance and revenue guidance. The retailer now sees full-year earnings of between $US3.50 and $US3.65 a share and full-year revenue of $US15.4-$US15.5 billion.

Shares are trading up more than 11% on Friday – to their best level since December 2016. Still, Morgan Stanley’s underweight on the stock, raising its price target to $US47, 11% below where shares closed on Thursday.

“We expect 2Q will be the strongest quarter in 2018 and remain UW,” analysts from Morgan Stanley wrote in a note sent out to clients on Friday.

They added, “We still expect 400 bps of sequential comp deceleration in 3Q (flat 3Q vs. +4% 2Q) and though we remain Underweight, we are encouraged by JWN’s 2Q results.”

After crunching the numbers, Morgan Stanley says it has a new full-year earnings estimate of $US3.51 (vs. $US3.35 prior), which raises the following years by $US0.20 apiece.

That gives them earnings of $US3.50 a share in 2019 and $US3.80 a share in 2020-2022, versus their previous estimates of $US3.30 and $US3.60 respectively.

Shares of Nordstrom were up 11% this year through Thursday.

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