Major department stores receive rating reprieve
By Staff -- Home Textiles Today, 12/20/2001 12:00:00 AM
New York — Expecting a first-quarter rally in retail stocks will follow a weak holiday season, Merrill Lynch analyst Daniel Barry has raised his rating on three major department store players, J.C. Penney, Fedederated and May Department Stores.
Barry said he expects retail profits will begin to improve early next year, setting the stage for even greater growth later in 2002 as the overall economy gains strength.
Given that hopeful outlook, Barry raised his rating on J.C. Penney and Federated to a 'strong buy' from an earlier 'buy' rating, and boosted his rating on May Department Stores to a 'buy' from an earlier 'hold.' Barry also upped his rating on luxury retailer Tiffany & Co. to a mid-term 'buy' from an earlier 'neutral' rating.
"Fundamentally, the earnings estimate erosion underway since Sept. 11 should end in early January, when retail stocks should fully discount the poor Christmas shopping season," Barry said in a research note.
Retail stocks have already staged a recovery from the lows they touched after the September 11 terrorist attacks, but still remain beneath their highs for the year.
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