June 14, 2019 / 1:20 PM / 5 months ago

BUZZ-Hudson's Bay Co: Cowen raises PT on 'better-than-feared' Q1 results

** Cowen and Company raises Hudson’s Bay Co’s PT by C$2 to C$12, an upside of 28.5% to stock’s Thursday close, encouraged by “better-than-feared” Q1 results

** Brokerage says key tenants to HBC’s story may be coming together, with results in co’s upscale Saks Fifth Avenue and off-price business Saks Off Fifth above expectations

** Canadian department store operator’s management began to make merchandise, pricing, and promotional/marketing changes last year, which are now beginning to pay off in Saks Off Fifth, brokerage says

** Analysts at Scotiabank echo the sentiment, says HBC reported a mixed Q1 but early results in parts of the business are encouraging, especially the momentum at Saks; rates co at “sector perform” with PT of C$9.34

** Co reported a 2.4% rise in same-store sales in Saks Fifth Avenue, while Saks Off Fifth reported a 4.4% rise on Thursday

** Hudson’s Bay, which also owns Saks Fifth Avenue, is evaluating a C$1.74 billion ($1.3 billion) take-private cash offer on Monday put together by Executive Chairman Richard Baker and the retailer’s other shareholders

** Go-private offer to likely go through which is somewhat unfortunate given HBC looks to be gaining traction operationally in retail - Scotiabank

** TD Securities analysts on the other hand remain cautious on HBC based on the current risk/reward profile inclusive of the downside potential of the offer not taking place; raises PT to C$10.50 from C$9.50

** All 5 brokerages covering the stock rate it “hold”; median PT C$9.73 - Refinitiv data

** Up to Thursday’s close, stock up ~28% YTD, against a 12.6% fall before the offer (Reporting by Shanti S Nair in Bengaluru)

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