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The Zacks Analyst Blog Highlights: Macy's and Amazon
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For Immediate Release
Chicago, IL – November 8, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Macy’s, Inc. (M - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Should Macy's Spin-Off Its E-Commerce Business?
A few weeks ago, The Wall Street Journal reported that luxury department store chain Saks Fifth Avenue (owned by Toronto-based Hudson's Bay Co.) is aiming to take its e-commerce division public at a valuation of $6 billion, sending ripples across the retail industry and making investors wonder if Macy’s would do the same.
The new $6 billion valuation for Saks.com is triple the assessment the unit received following investment from private equity firm Insight Partners earlier this year.
Many rightfully took this as a sign that other department stores’ online channels, like Macys.com, could have similarly increased in value, especially after activist investor Jana Partners announced a stake in the department store chain last month; the firm sent a letter to Macy’s board urging the retailer to separate its online and brick-and-mortar businesses and saying its e-commerce segment is now worth more than Macy’s as a whole is today.
Given these two catalysts, it’s not surprising that Macy’s shares spiked 17.5% the day the WSJ report was published. The Covid-19 pandemic certainly changed the way we view the retail industry, as it highlighted which brands have the ability to weather unprecedented circumstances.
If Macy’s were to spin off its e-commerce unit, it would be a major event for retail, reflecting how valuable online storefronts have become these days.
But it wouldn’t be an easy feat.
Macy’s still has hundreds of open stores across the country (compared to only a few dozen for Saks), so splitting the physical and digital businesses would present many logistical and operational challenges. Plus, management has yet to indicate that it’s even considering such a move.
Wall Street analysts have also weighed in on the idea. Citibank analyst Paul Lejuez told clients that he didn’t think a split made sense for Macy’s, maintaining a sell rating and a price target of $20 on the stock. On the other hand, Cowen analyst Oliver Chen argued that even though a spin-off is unlikely to happen in the near term, Macy’s e-commerce unit could be worth $40+ a share as a standalone business.
Investors, however, are clearly open to the idea. It’s also important to note that Jana Partners has a history of endorsing mega retail deals; they were part of the crowd that pushed organic grocer Whole Foods Market to be acquired by Amazon.
Macy’s stock has gained over 174% year-to-date, and its market cap now sits at almost $9.6 billion. Shares are still a bargain as well, currently trading at an 8.2X forward multiple.
The company is set to report earnings on November 18, which will give us an updated look at its online business performance as the ultra-important holiday season approaches.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Macy's and Amazon
For Immediate Release
Chicago, IL – November 8, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Macy’s, Inc. (M - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Should Macy's Spin-Off Its E-Commerce Business?
A few weeks ago, The Wall Street Journal reported that luxury department store chain Saks Fifth Avenue (owned by Toronto-based Hudson's Bay Co.) is aiming to take its e-commerce division public at a valuation of $6 billion, sending ripples across the retail industry and making investors wonder if Macy’s would do the same.
The new $6 billion valuation for Saks.com is triple the assessment the unit received following investment from private equity firm Insight Partners earlier this year.
Many rightfully took this as a sign that other department stores’ online channels, like Macys.com, could have similarly increased in value, especially after activist investor Jana Partners announced a stake in the department store chain last month; the firm sent a letter to Macy’s board urging the retailer to separate its online and brick-and-mortar businesses and saying its e-commerce segment is now worth more than Macy’s as a whole is today.
Given these two catalysts, it’s not surprising that Macy’s shares spiked 17.5% the day the WSJ report was published. The Covid-19 pandemic certainly changed the way we view the retail industry, as it highlighted which brands have the ability to weather unprecedented circumstances.
If Macy’s were to spin off its e-commerce unit, it would be a major event for retail, reflecting how valuable online storefronts have become these days.
But it wouldn’t be an easy feat.
Macy’s still has hundreds of open stores across the country (compared to only a few dozen for Saks), so splitting the physical and digital businesses would present many logistical and operational challenges. Plus, management has yet to indicate that it’s even considering such a move.
Wall Street analysts have also weighed in on the idea. Citibank analyst Paul Lejuez told clients that he didn’t think a split made sense for Macy’s, maintaining a sell rating and a price target of $20 on the stock. On the other hand, Cowen analyst Oliver Chen argued that even though a spin-off is unlikely to happen in the near term, Macy’s e-commerce unit could be worth $40+ a share as a standalone business.
Investors, however, are clearly open to the idea. It’s also important to note that Jana Partners has a history of endorsing mega retail deals; they were part of the crowd that pushed organic grocer Whole Foods Market to be acquired by Amazon.
Macy’s stock has gained over 174% year-to-date, and its market cap now sits at almost $9.6 billion. Shares are still a bargain as well, currently trading at an 8.2X forward multiple.
The company is set to report earnings on November 18, which will give us an updated look at its online business performance as the ultra-important holiday season approaches.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.