Legacy retailer Macy's has several opportunities for revenue growth that could make its stock soar, according to investment firm Evercore ISI. Analyst Omar Saad upgraded Macy's to outperform from in-line, saying in a note to clients Wednesday that the retailer's stock did not reflect the upside potential for its sales and profits. "Not only do we see the opportunity for Macy's to more aggressively leverage its core assets (real estate, web traffic) to create significant incremental equity value from the current depressed valuation, we are observing a culture and strategy shift that is embracing a more data-driven, disciplined approach to managing all aspects of the business (stores, inventory, marketing, promotions, costs, etc.)," Saad wrote. Evercore said Macy's could build out new revenue streams by monetizing its own real estate and adopting some tools from e-commerce giant Amazon for its digital strategy by increasing advertising and third-party selling. The company already uses both strategies, but not at the same rate relative to sales that Amazon does, Evercore said. Additionally, the company may have emerged from the pandemic with a larger customer base. "Macy's captured a lot of new younger customers during the pandemic, and is also just now seeing the return of its core older customer," the analyst said. Evercore kept its price target on Macy's at $50 per share, which is more than 90% above where the stock closed Tuesday. In the same note, Evercore also downgraded Nordstrom to in-line from outperform, saying that the company's digital strategy does not appear to be working as well as investors hoped. "We will watch for signs that: 1) Nordstrom's digital advantage is making a difference; 2) Rack is beginning to get great inventory again; and 3) apparel trends return to dressier styles and looks as the world emerges from COVID," the note said. -CNBC's Michael Bloom contributed to this report.
Macy's flagship store in Herald Square in New York, Dec. 23, 2021.
Scott Mlyn | CNBC
Legacy retailer Macy's has several opportunities for revenue growth that could make its stock soar, according to investment firm Evercore ISI.