Barclays Issues Controversial Retail Coverage on Top Retailers
If you ever want to know what happens when you see an analyst issue new coverage that goes against the grain and goes against what is popular, look no further than a Barclays retail segment call from Thursday, March 31, 2016.
Matthew McClintock, the Barclays analyst largely in charge of these calls, has created a bit of a stir. 24/7 Wall St. covered the larger and specialty retailers from the call, but skipped Barclays coverage of the auto parts segment.
Included in the review is some detail on price targets, color, relative trading data and performance metrics. Some of these calls are very much against the grain.
Target Corp. (NYSE: TGT) was downgraded by Barclays to Underweight from Overweight, and it slashed the price target to $70 from $90 (versus an $83.60 prior close). The firm thinks that Target’s same-store sales and margin expansion sales are overly optimistic while it faces severe competition from general merchandise selling and from e-commerce. Target was accused of falling short on same-store sales growth continually, and that margin growth targets would likely be offset by labor and a lack of ways to offset costs.
Wal-Mart Stores Inc. (NYSE: WMT) was assumed as Equal Weight but the old target of $61 is now set at $70 (versus a $68.80 close). Wal-Mart shares have a consensus analyst target price of $64.72 and a 52-week trading range of $56.30 to $81.39.
Best Buy Co. Inc. (NYSE: BBY) was started as Overweight with a $45 price target (versus a $31.57 close). It has a consensus price target of $34.41 and a 52-week range of $25.31 to $39.10. Shares were last seen up 6% so far in 2016.
Costco Wholesale Corp. (NASDAQ: COST) was started as Equal Weight, and the old $160 price target was set at $180. The stock was trading at $157.60 going into the call, with a $168.65 consensus target price and a 52-week range of $117.03 to $169.73.
Home Depot Inc. (NYSE: HD) was started as Overweight with a $150 price target (versus a $133.42 close). The consensus analyst target is $142.17, and the 52-week range is $92.17 to $135.47. On the other hand, rival Lowe’s Companies Inc. (NYSE: LOW) was started as Equal Weight with an $85 price target (versus a $76.02 close). It has a consensus target price of $83.79 and a 52-week range of $62.62 to $78.13. Coming into this call from Barclays, Home Depot was up 1.4% so far in 2016, versus a 0.4% gain for Lowe’s. Over the past year, Home Depot shares were up 18.8% and Lowe’s was up 3.2%.
Bed Bath & Beyond Inc. (NASDAQ: BBBY) was started as Equal Weight with a $50 price target (versus a $49.59 close). The consensus price target is $48.44, and it has a 52-week range of $41.26 to $78.10. The stock was up 2.8% so far in 2016.
Restoration Hardware Holdings Inc. (NYSE: RH) was started as Equal Weight with a $50 price target (versus a $40.56 close). The consensus price target was last seen at $51.86, and the 52-week range is $35.03 to $106.49. The shares were last seen down almost 49% so far in 2016.
Williams-Sonoma Inc. (NYSE: WSM) was started as Underweight with a $45 price target (versus a $55.73 close). The consensus price target is $62.43. The 52-week range is $47.33 to $89.38. Shares were last seen down 4% so far in 2016.
Two other key calls seen for specialty retailers were listed as follows:
- Container Store Group Inc. (NYSE: TCS) was started as Equal Weight with a $6 price target.
- Party City Holdco Inc. (NYSE: PRTY) was started as Equal Weight with a $16 price target.