Being cheaper doesn't make Macy's Inc.'s stock more attractive, according to analyst Bill Dreher at Susquehanna Financial, given increasing concerns over how the department store chain will deal with the secular changes in the retail sector. Dreher reiterated his neutral rating, while cutting his stock price target to $20 from $26. "Given the lack of catalysts in the near term, and the pace and uncertainty with current plans, we see no reason to bottom fish," Dreher wrote in a note to clients. The stock inched up 0.1% in afternoon trade Thursday, paring earlier gains of as much as 4.8%. The stock closed the previous session at a 6 1/2-year low in the wake of the company's gross margin warning. It has plunged 39% year to date, while the SPDR S&P Retail ETF has lost 8% and the S&P 500 has gained 8.6%. The stock's decline has brought the week-to-date ratio of price to earnings-per-share expectations over the next 12 months to 7.05, the lowest level seen since December 2008. "While valuations are near the trough levels of the Great Recession, those multiples had the upside potential of cyclical margin recovery, while current pressures are due to an overall secular demise, and the unprecedented retail rout," Dreher wrote.
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