Goldman Adds Kohl's to 'Recommended List'

Analyst George Strachan thinks the department store has a solid niche in the under-served middle apparel market

Goldman Sachs added Kohl's Corp. (KSS ) to its recommended list, from market outperform.

Analyst George Strachan says Kohl's is the highest-quality genuine organic growth story in the broadlines sector today with long-term EPS growth projected at three times the market (24%), the above industry-average return on equity (12.9%), and a secure niche in the large, under-served $100 billion middle market for apparel.

He expects the stock to command elevated relative price-to-earnings as Kohl's continues to generate sector-leading growth in the slow-growth market. Strachan set a $70 12-month price target, which equates to 45.4 times his unchanged $1.65 fiscal 2002 (Jan.) EPS estimate, and 2.0 times the Standard & Poor's 500 multiple.

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