UPDATE 1-JP Morgan Securities raises Macy's to neutral
(Recasts; adds details)
July 14 (Reuters) - J.P. Morgan Securities upgraded Macy's Inc (M.N) to "neutral" from "underweight", as the price of the stock has fallen over the past few months, and noted that fears over the department store chain's liquidity position were unwarranted.
The brokerage said Macy's current stock price more accurately discounts optimistic Street estimates, as well as the high degree of risk associated with its divisional integration.
Shares of the company were up at $16.10 in trading before the opening bell on Monday, after closing at $15.58 Friday on the New York Stock Exchange.
JPMorgan said it was unlikely that Macy's credit position had eroded further since the end of the first quarter.
On Friday, Macy's Chief Executive Terry Lundgren wrote in a letter to executives that the company was "financially healthy" in spite of the declining value of its share price.
The brokerage lowered its 2008 earnings view to $1.77 a share from $1.83, and said the Street's view of 10.6 percent growth was optimistic for a company with very little square footage growth and limited buyback opportunities.
Macy's 2008 earnings view of $1.85 to $2.15 "is too optimistic and the company should adopt a more conservative outlook," analyst Charles Grom wrote in a note to clients. (Reporting by Adveith Nair in Bangalore; Editing by Bernard Orr)
