With a private offering underway, Barclays raised its rating on Nordstrom (New York Stock Exchange:JWN) to Equal Weight from Underweight and raised its target price by 28% to the offer price of $23.
On Wednesday, a group of investors led by Nordstrom family He submitted a non-binding offer to acquire the retailer, financed through a combination of revolving equity and cash commitments from members of the Nordstrom family and Mexican department store chain El Puerto de Liverpool, along with $250 million in new bank financing.
While there is still uncertainty over whether the offer will receive the necessary two-thirds of shareholder votes, Barclays views the effort to take the company private as “the right thing to do for the business in the long term” and believes it is time to step back from its Underweight rating.
“We continue to view the business as facing long-term traffic headwinds, with risks to the acceleration of Rack store openings due to diminishing returns from four-wall stores, but see limited downside risk given the proposed transaction,” said Barclays analysts Paul Kearney and Adrienne Yih.
Nordstrom (JWN) shares open 1.5% higher on Thursday.