Time to buy Caleres ahead of the shoe company’s earnings next month, according to Piper Sandler. Analyst Abbie Zvejnieks raised the stock to overweight from neutral after Caleres’ preliminary announcement earlier this month boosted her confidence in the footwear stock. The Missouri-based company behind Famous Footwear and other brands said it expects record annual sales and adjusted earnings per share for fiscal 2022 when it reports results in March. “CAL positively pre-announced 2022 earnings and set EPS expectations of >$4.00 on a forward basis, highlighting the structural revenue improvements CAL has made, including interest expense reductions, share buybacks, store and brand closures, SKU rationalization , further strategic promotions and increased store productivity,” Zvejnieks wrote to clients on Monday. Caleres shares are outperforming this year, up 16% in 2023, better than the S&P 500’s 6% gain. Footwear stocks also fared relatively well last year, down more than 1%, while the broader index fell 19% . However, the analyst’s price target of $35, up from $26, is more than 34% higher than Friday’s closing price for the stock. Caleres shares jumped more than 3% on Tuesday. For Zvejnieks, the improvements made by Caleres during the pandemic indicate that footwear stocks are now undervalued. Caleres has reduced its debt, exited four underperforming brands and closed more than 200 stores, according to the note. It also changed its promotional strategy to exclude certain brands and prepared a more premium range. All of these moves will help Caleres navigate the promotional environment and improve its revenue compared to 2019. “This resulted in essentially flat retail sales with a ~12% reduction in floor space, which we believe should provide a better operating margin,” reads the Note. “In CAL’s 2/15 pre-announcement, management set a $4.00 floor on future earnings, which we believe allays investor concerns about the transitory nature of earnings margins in 2021.” “With the necessary earnings reset for 2023, we now feel comfortable that CAL is undervalued,” he continued. CAL 1D mountain Caleres shares 1-day — CNBC Michael Bloom contributed to this report.
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