MORGAN STANLEY: We just witnessed Nordstrom's strongest quarter of the year
- Nordstrom's second-quarter results beat on both the top and bottom lines, sending shares up more than 11%.
- "We expect 2Q will be the strongest quarter in 2018," analysts from Morgan Stanley said.
- Morgan Stanley raised its price target to $47 - 11% below where shares settled Thursday.
- Watch Nordstrom's stock price in real-time here.
Morgan Stanley says the second quarter was as good as it gets for Nordstrom this year.
On Thursday, the retailer reported second-quarter results that topped Wall Street estimates on both the top and bottom lines. It earned an adjusted $0.95 a share on revenue of $4.07 billion, easily beating the $0.85 and $3.96 billion that Wall Street analysts surveyed by Bloomberg were expecting.
Nordstrom also raised both its full-year adjusted earnings guidance and revenue guidance. The retailer now sees full-year earnings of between $3.50 and $3.65 a share and full-year revenue of $15.4-$15.5 billion.
Shares are trading up more than 11% on Friday - to their best level since December 2016. Still, Morgan Stanley's underweight on the stock, raising its price target to $47, 11% below where shares closed on Thursday.
"We expect 2Q will be the strongest quarter in 2018 and remain UW," analysts from Morgan Stanley wrote in a note sent out to clients on Friday.
They added, "We still expect 400 bps of sequential comp deceleration in 3Q (flat 3Q vs. +4% 2Q) and though we remain Underweight, we are encouraged by JWN's 2Q results."
After crunching the numbers, Morgan Stanley says it has a new full-year earnings estimate of $3.51 (vs. $3.35 prior), which raises the following years by $0.20 apiece.
That gives them earnings of $3.50 a share in 2019 and $3.80 a share in 2020-2022, versus their previous estimates of $3.30 and $3.60 respectively.
Shares of Nordstrom were up 11% this year through Thursday.
