UBS Raises Macy’s Price Target but Maintains Sell Rating

Core Viewpoint - UBS has raised its price target on Macy's to $7.00 from $6.50 while maintaining a Sell rating [1] Group 1: Earnings Forecast - UBS's recent channel checks indicated stronger-than-expected third-quarter sales trends, prompting an increase in Q3 earnings forecast by $0.18 to a loss of $0.12 per share, with an expectation of an EPS beat of $0.03 [2] - Despite the improved quarterly outlook, Macy's is likely to reaffirm its fiscal 2025 guidance due to ongoing uncertainties related to tariffs and macroeconomic conditions [2] Group 2: Market Expectations - The market seems to anticipate a similar stance from Macy's management, which reduces the likelihood of significant revisions to consensus estimates or major movements in the stock's valuation multiple following the earnings report [3] - There is potential upside if Macy's provides more positive commentary on early fourth-quarter trends, but elevated bullish sentiment could turn the Q3 release into a "market-clearing event" [3] - The options market is pricing in a ±10.5% move on earnings, which is higher than Macy's historical average of 7.8%, indicating expectations for increased post-print volatility [3]