Morgan Stanley has restarted its coverage of the retail sector, with a very mixed fanfare among the key retailers in America. What is interesting is how some of the stocks were given new Underweight ratings, which is the equivalent of “sell” when it comes to ratings.
Once you look at the price targets, the “sell” theme may not seem as strong as other Underweight ratings. Some of the targets are also largely in line with the current consensus price target from Thomson Reuters. These stocks were included in the daily analyst upgrades and downgrades from Wall Street, but this is a more detailed look.
Bed Bath & Beyond Inc. (NASDAQ: BBBY) was started as Underweight at Morgan Stanley on Tuesday. The move is because the company’s growth opportunities seem to have peaked. What is interesting is that the stock was actually up on Tuesday morning, but only by 0.2% to $61.11, against a 52-week range of $59.89 to $80.82. The consensus price target is closer to $70 here, and the stock trades at only 11 times expected earnings per share for 2015.
PetSmart Inc. (NASDAQ: PETM) was started as Underweight and given a $60 price target, versus a $59.90 close. The consensus price target is only at $58.53, so the call does not seem that far out of the norm. The one standout issue here is that PetSmart shares rose 5% on Monday after Barron’s touted the stock’s turnaround story this past weekend.
Staples Inc. (NASDAQ: SPLS) must still be at a loss for where its “Easy Button” went. Morgan Stanley started coverage with an Underweight rating and $11 price target, slightly under the $11.23 close. Staples has a consensus price target of $11.14, and shares were down 0.6% at $11.16 after the call on Tuesday morning.
Target Corp. (NYSE: TGT) was started as Underweight and given a $60 price target. Apparently the analysts are not under the hypnosis of the massive dividend hike being the best tell for Target’s future either. Target shares were down 0.2% at $58.28 on Tuesday morning, with a consensus price target of $59.33.
Again, these are just the Underweight ratings seen from Morgan Stanley in the retail sector relaunch of coverage.