Why Kohl's Stock Popped Today
Key Points
The retailer earned several price target increases from analysts.
This followed an estimates-beating third quarter, reported Tuesday.
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Kohl's (NYSE: KSS) might be considered a meme stock currently, but on Wednesday its share price rise wasn't necessarily due to social media posts or other online commentary. Several analysts provided updates on the retailer, with most featuring price target increases. Investors took these positive takes to heart, trading the stock up by almost 8% on the day.
A surprise net profit
The analysts were reacting to Kohl's third-quarter results, which were published Tuesday morning. The company's net sales declined by almost 3% to $3.4 billion, with comparable sales down 1.7%. Net income not according to generally accepted accounting practices (GAAP) was $11 million for the period, or $0.10 per share.
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Both metrics beat their corresponding consensus analyst estimates, which were for $3.3 billion on the top line and a non-GAAP (adjusted) loss of $0.18 per share.
By my count, six of those prognosticators increased their price targets on Kohl's on Wednesday. Among the raisers was TD Cowen's Oliver Chen, who now feels the stock is worth $23 per share; previously, his level was $17. He maintained his hold recommendation.
According to reports, Chen waxed bullish on the company enhancing its value-for-money reputation. He also feels it performed particularly well in sales of certain categories, such as jewelry, which helped limit the decline in the comparable sales figure.
Dogged by a certain reputation
Kohl's suffers from its meme stock status, as it's a more fundamentally sound company than others tagged with that designation. Having said that, it's still fighting against the retail apocalypse, and has struggled more than some peers to stay relevant in our Age of E-commerce. I liked how the company did in its third quarter, but there's more room for improvement in my view.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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