While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Nordstrom  slipped about 1% on Friday after Stifel downgraded the fashion retailer from buy to hold.

So what: Along with the downgrade, analyst Richard Jaffe removed his price target of $65, suggesting that he sees little risk-adjusted upside going forward. While momentum traders might be attracted to the stock's bounce over the past few weeks, Jaffe thinks that Wall Street is overlooking the significant costs and risks associated with Nordstrom's e-commerce and off-sale initiatives.


Now what: According to Stifel, Nordstrom's risk/reward trade-off is rather unattractive at this point. "Nordstrom has focused its efforts on the e-commerce business, the Rack off-price business and the new markets of Canada and New York City," noted Jaffe. "These investments are different than prior investments and differ greatly from the investment in a new Nordstrom full-line store." When you couple that growth uncertainty with Nordstrom's still-hefty debt load, it's easy to understand Stifel's cautiousness. 

More compelling ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Why Nordstrom Inc. Shares Slipped Today originally appeared on Fool.com.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Introduction to Economic Indicators

Measure the performance of the economy.

View Course »

Investing in Startups

The lucrative and risky world of startups.

View Course »

Add a Comment

*0 / 3000 Character Maximum