NEW YORK (AP) -- Home merchandise sales may increase by a double-digit percentage rate at Macy's this year as the housing market continues to build momentum, an analyst said Tuesday as she raised her rating and price target on the retailer.
THE SPARK: Deborah Weinswig of Citi Investment Research boosted Macy's Inc. to "Buy" from "Neutral" and lifted its price target to $46 from $38.
THE BIG PICTURE: The housing market is showing continuing signs of a recovery as consumers look to take advantage of low interest rates. Home prices are also on the rise. On Tuesday a report from real estate date provider CoreLogic said that U.S. home prices jumped by the most in 6 ½ years in December, spurred by a low supply of available homes and rising demand.
Higher prices can make homeowners feel wealthier, which can encourage more consumer spending.
THE ANALYSIS: Weinswig said in a client note that sales of home merchandise could climb into the double-digits at Macy's this year as the housing market recovers. She said that home merchandise was one of Macy's strongest categories last year, benefiting from sales of big-ticket items like furniture.
The analyst said Macy's is her favorite department store stock for the year.
SHARE ACTION: Macy's stock added $1.43, or 3.7 percent, to $40.15 in afternoon trading Tuesday. Over the past year, the stock has traded between $32.31 and $42.17. It is down 2.5 percent over the last three months.