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Gordon Haskett upgrades Kohl's, raises price target

Gordon Haskett Research Advisors on Aug.10 upgraded Kohl's Corp. to Hold from Reduce based on the company's current valuation in the market, while increasing the company's price target to $37 from $36.

In their report, Gordon Haskett analysts noted that Kohl's shares fell 8% after the company released earnings results Aug. 10, putting it at a share price reduction of 22% year-to-date. They noted that the new price target of $37 represented a downside of less than 5% from the stock's current trading price. Kohl's shares closed at $39.50 on Aug. 10, down 5.8%, as the broader department store sector tumbled amid concerns about the industry's long-term fundamentals.

The price target increase was based on the company's second-quarter EPS result of $1.24, which exceeded Gordon Haskett analysts' in-line estimate of $1.19. In addition, comparables for the balance of the year appear "modestly better," the team said, which further supported their price target increase.

The department store operator's second-quarter guidance looks "achievable," the analysts said. The company expects EPS of $2.92 to $2.97 for the year, with normalized EPS ranging between $3.60 and $3.65, according to S&P Capital IQ.

The team raised its full-year 2017 EPS estimate for the company to $3.75 from $3.65 and lifted its 2018 estimate to $3.55 from $3.45.

"All told, while conceptually the department store names could be re-rated lower in the coming quarters, we think sentiment, which is worse than 2008 levels has reached a bottom," the team said.