Markets & Finance

Morgan Stanley Upgrades Dillard's

Dillard's (DDS) shares rallied Wednesday afgter Morgan Stanley upgraded the shares to outperform from neutral. On Tuesday, the retailer posted $1.20 fourth quarter EPS from operations.

Analyst Bruce Missett says the results were well above consensus estimates. He says merchandising initiatives, such as increased commitment to private brands, renewed focus on purchasing, and better markdown management helped boost gross margin, while payroll reduction and back office automation initiatives brought down expenses.

He raised his EPS estimate from $0.80 to $1.75 for fiscal year 2003 (Jan.) to reflect continued leverage from operational improvements. He sees EPS of $2.20 in fiscal year 2004. He has a $28 price target on the stock.

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