Morgan Stanley Downgrades Kohls (KSS)

Morgan Stanley reported on Tuesday that it has lowered its rating on discount retailer, Kohl’s Corporation (KSS).

The firm has downgraded KSS from an “Equal weight” to an “Underweight,” and has given the company a $42 price target. This price target suggests a 11% increase from the stock’s current price of $47.30.

An analyst from the firm commented, “we question if KSS can drive the sales to achieve the Street’s $4.39 ‘13 EPS given macro headwinds and think EPS at low end of $4.15-$4.45 guidance is more likely. With shares at a ~6% premium to M’s ‘13 P/E, valuation looks high, and likely negative EPS revision catalysts carry added downside risk. … We anticipate negative ‘13 Softline retail traffic given a tough economic setup and higher payroll taxes. KSS’ high mid-tier consumer exposure makes the dept. store especially vulnerable, in our view. Plus, JCP’s ’13 sales and coupon re-intro intensifies competitive pressures.”

Kohl’s shares were down -$1.39, or -2.86% during Tuesday morning trading. The stock has increased dropped -3% in the past year.

The Bottom Line
Shares of Kohl’s Corporation (KSS) have a 2.93% yield, based on Tuesday morning’s price of $47.74.

Kohl’s Corporation (KSS) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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