UPDATE 2-RESEARCH ALERT-Goldman upgrades Macy's to buy

venerdì 6 marzo 2009 16:18
 

(Adds share movement)

March 6 (Reuters) - Goldman Sachs upgraded Macy's Inc (M.N: Quotazione) to its America's conviction buy list from "neutral" and said the company has "greater earnings deliverability," driven by cost savings from its centralization efforts.

Macy's shares rose as much as 13 percent in early trade.

In February, Macy's unveiled a plan to integrate its business divisions into one unit. The plan aims at centralizing its buying and merchandise planning primarily in New York.

Analyst Adrianne Shapira said centralization efforts have been well executed and present $400 million in annual cost savings.

"We believe this cost savings lever should help blunt top-line and margin pressures - a key advantage that its peers do not have," Shapira said.

Macy's is a market share gainer in the consolidating department store sector, the analyst said.

Macy's management has taken meaningful steps, including cutting its capital expenditures and dividend, to alleviate balance sheet concerns, the analyst said.

As same-store sales declines moderate, shares are expected to rise, Shapira wrote in a note to clients.

The brokerage raised its price target on the department store chain by 25 cents to $8.25.

Shares of the Cincinnati-based company rose 87 cents to $7.45, before shedding some of the gains to trade up 54 cents at $7.12 later in the morning on the New York Stock Exchange. (Reporting by Renju Jose in Bangalore; Editing by Anne Pallivathuckal)