Barclays Updates Rating on Nordstrom Inc

Barclays updated its rating on Nordstrom Inc (NYSE: JWN) shares to ‘Equal Weight’ from ‘Underweight’ on Thursday. This decision comes after a proposal to take the company private by founding Nordstrom family members in partnership with El Puerto de Liverpool, a Mexican retailer.

“While there is still some uncertainty around the transaction given the required 2/3 shareholder vote, we believe it is appropriate to step aside on our Underweight rating,” stated Barclays analysts.

The investment bank believes taking Nordstrom private could be beneficial for the business in the long term, although they do not have a prediction on how the remaining shareholder votes will go.

JWN shares rose by 1% during premarket trading.

The proposal, submitted to the Special Committee on September 3, 2024, suggests a buyout at $23.00 per share. This offer is slightly above the September 3 closing price of $22.82 and represents a notable 34.8% premium over the $17.06 price on March 18, 2024, which the company states remains unaffected by the transaction news.

The buying consortium, which includes the Nordstrom family and El Puerto de Liverpool, owns a collective 43% of the outstanding shares—33.4% held by the family and 9.6% by the Mexican retailer.

Barclays has also revised its price target for Nordstrom to $23, up from $18. This new target is grounded on 11.25 times the estimated earnings per share (EPS) for the calendar year 2026, projected at $2.04, aligning with JWN’s current earnings multiple.

Nordstrom stated in a Wednesday announcement that a special committee will review the offer “in consultation with independent financial and legal advisors to determine the course of action that is in the best interests of Nordstrom and all shareholders.”

Founded in 1901, Nordstrom was a private company for 70 years before becoming public. The Nordstrom family made a previous unsuccessful attempt to take the company private in 2018. The current proposal includes $250 million in bank financing, which would provide the family with 50.1% ownership of the company.