Nordstrom shares are soaring after the department store chain offered up an upbeat outlook for the coming year, forecasting profits and single-digit revenue growth.
Other retailers including Macy’s, Kohl’s and Target have similarly offered better-than-expected full-year forecasts in recent days. They anticipate further consumer momentum as people return to social activities and offices.
But none have seen as strong of a reaction on Wall Street as Nordstrom. Shares were recently up more than 30% in premarket trading.
According to Evercore ISI analyst Omar Saad, that’s because Nordstrom has been drowned in negative sentiment in recent months. That was due in large part to poor performance at its off-price Rack business, he said. And so in the latest quarter, Nordstorm made “baby steps,” he said, which was more than enough to give shares of the retailer a massive lift.
That also means Nordstrom still has a lot of room to grow, particularly at the Rack business, where net sales still remain below 2019 pre-pandemic levels. Nordstrom’s full-line department store business, for comparison, is essentially flat with that period, the company reported Tuesday.
As of Tuesday’s market close, Nordstrom’s stock had sold off over 30% in the past six months. Nordstrom is also currently among the most heavily shorted stocks, with 22% of its shares available for trading sold short.
BMO Capital Markets analyst Simeon Siegel echoed Saad’s sentiment. The analyst commended Nordstrom for ending the year much stronger than it started.
However, he said, BMO remains sidelined on recommending the stock because it’s unclear whether Nordstrom will actually be able to achieve its full-year targets, or if they will end up being a “one-time achievement.”
BMO’s price target on Nordstrom shares is $30. The stock had closed Tuesday at $19.54.
This story is developing. Please check back for updates.