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One Lone Department Stores Rated ‘Buy’ at UBS
11 Apr 2012 EDT - CNBC.com

UBS has a ‘Buy’ rating on only one department store. Know which it is?According to analyst Michael Binetti the best stock in the space right now -- and therefore a 'Buy' -- is Nordstrom.Binetti has crunched the numbers, examined the trends and believes Nordy’s, as it’s affectionately called, will see strong growth throughout 2012 due to recently increased loyalty program incentives, rising customer satisfaction ratings and historically outperforming when the economy is improving.

Plus, their client base is more likely to open their wallets. “High end consumers always have a greater propensity to spend.

And he also thinks history bodes favorably for Nordstrom.“During 2003-2007 Nordstrom outperformed most other department stores. We think this is a similar economy where people start to feel better about their budgets – and people will trade up to Nordstrom.”

Binetti initiated Nordstrom with a $63 price target. By contrast Binetti started coverage of rivals Saks, Macy's, Kohl's, and J.C. Penney with "Neutral" ratings.

Of those mentioned above, Binetti said that Saks is one of the retailers with the most potential for its 2012 revenue at stores open at least a year, explaining that as the economy gets better it will create new aspirational customers. He gave Saks a $12 price target.

Binetti views Macy's as the most improved stock in the department store sector over the last two years. "The company emerged from the recession with stores customized to local tastes, significantly re-energized employees and a top-notch e-commerce platform," he wrote.

Binetti started Macy's with a $43 price target. Binetti said he’s concerned a bit about J.C. Penney's near-term sales but that the company should be able to make $900 million in selling, general and administrative cuts by 2013.

“The new everyday value strategy seems smart but we have to see if it gains traction with consumers.”Binetti gave J.C. Penney a price target of $36.

Finally, the analyst says Kohl's will likely face some pressure as J.C. Penney works on its aggressive turnaround strategy and Macy's momentum continues to build.Binetti has a price target of $53 on Kohl's.

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Trader disclosure: On Apr 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Tim Seymour is long FCX; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long HPQ; Karen Finerman is long CF; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Dan Nathan is long AAPL JAN 450 PUTS; Dan Nathan is long BAC APR 8/MAY7 PUTS; Dan Nathan is long XLF APR 15 PUTS; Dan Nathan is long IBM APR 200 PUTS; Dan Nathan is long WIMT APR 60 PUTS; Dan Nathan is long RIM JAN 20 CALLS; Dan Nathan is long IWM APR 78 PUTS; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long PRST; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA

For Michael BenettiUBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities within the past 12 months of KSSWithin the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity: KSSUBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking servicesfrom this company/entity within the next three months: KSSUBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months: JWNThis company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided: KSSThis company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided: KSSWithin the past 12 months, UBS Securities LLC has received compensation for products and services other thaninvestment banking services from this company/entity: KSSUBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end): JCP UBS Securities LLC makes a market in the securities and/or ADRs of this company: JCPUBS Securities LLC makes a market in the securities and/or ADRs of this company: KSSUBS Securities LLC makes a market in the securities and/or ADRs of this company: MUBS Securities LLC makes a market in the securities and/or ADRs of this company: JWNUBS Securities LLC makes a market in the securities and/or ADRs of this company: SKSUBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month`s end (or the prior month`s end if this report is dated less than 10 working days after the most recent month`s end): MUBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month`s end (or the prior month`s end if this report is dated less than 10 working days after the most recent month`s end): JWN

CNBC.com with wires.

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