Stronger Retail Numbers Not Fueling Wall Street Just Yet
18 September 2009 - 3:05AM
Dow Jones News
If Wall Street's bullish calls on eBay (EBAY), BJs Wholesale
Club (BJ), Amazon.com (AMZN) and other big retailers this week seem
to suggest a new optimism about the U.S. consumer, think again.
U.S. retail sales came in better than expected this week, rising
in August by the most in more than two years. It might seem that
the uptick should translate into more bullish views on retail.
But the rash of consumer stock upgrades of late is actually a
mishmash of favorable views on e-commerce, predictions of certain
firms stealing market share from others, and picks of stocks that
lagged the recent market run.
E-commerce is one area where analysts see growth building. But
the picks are premised more on a resumption of the shift to buying
items online than on any rising consumer tide.
Tuesday, UBS analyst Brian Pitz noted enhancements to eBay's
main site as he raised the stock to buy from neutral atop an eBay
vendor's encouraging August data. The site is easier to use, and
users appear to be voting with their feet, he noted.
But there were no sweeping bullish calls on the U.S. consumer in
that upgrade.
"eBay's shift to multiple listings marked one of the company's
biggest changes in a while," Pitz and two colleagues wrote in a
Tuesday note to clients.
Amazon.com is also drawing the Street's attention, but more as a
convenient lure for brick-and-mortar customers than any bellwether
of a consumer resurgence.
Investors may be undervaluing Amazon.com by underestimating the
coming growth in e-commerce, Bank of America/Merrill Lynch analysts
Justin Post and Nat Schindler wrote as they raised the stock to buy
from neutral.
"We continue to see the sector as a double-digit three-year
grower as consumers continue to shift spend towards lower-priced
and more convenient online shopping," they said Wednesday.
In other cases, a company's ability to weather continuing
consumer distress is touted as critical.
Membership warehouse BJ's Wholesale Club's resilience featured
prominently in a Barclays upgrade this week.
BJ's traffic has held up relatively well in a tough environment,
a trend Barclays analysts said they see continuing as they raised
the stock to overweight Wednesday. In addition, it trades at a
discount to its peers.
Those who premise their arguments on a recovery usually don't
claim to see one any time soon.
Strong cyclical growth in the hotel and lodging industry is
coming, but is "still likely 12-18 months away," Citigroup's
Michael Bilerman wrote.
The firm initiated coverage of Marriott International (MAR),
Starwood Hotels (HOT) and eight other hotel and lodging stocks
Wednesday.
There are still plenty of indications that consumers are
struggling, and they don't go unnoticed.
Most recently, Kroger Corp. (KR) grocery stores' disappointing
earnings report included a sharper uptick in food-stamp use, which
Citigroup analyst Deborah Weinswig noted among several pressures on
food retailers as she cut her earnings estimates for Safeway Inc.
(SWY) and Supervalu (SVU).
-By Brendan Conway, Dow Jones Newswires; (212) 416-2670;
brendan.conway@dowjones.com