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Investing.com -- JPMorgan lifted its rating for Macy’s Inc. to Overweight from Neutral in a note Thursday, citing the retailer’s growing market share and financial resilience amid a turbulent consumer backdrop.

"We are upgrading Macy’s Inc. (M) to Overweight from Neutral as a share gainer in a volatile consumer and department store environment with a solid balance sheet," the bank wrote.

“We believe Macy’s brand is taking share from KSS and other middle-market stores,” JPMorgan (NYSE:JPM) analysts added, adding that its upscale banner, Bloomingdale’s, is also gaining traction. “Bloomingdale’s is taking share from higher-end stores like Saks and Neiman, as it adds new brands to stores.”

JPMorgan praised Macy’s solid financial footing, noting that management emphasized the company is “going to be around to pay our bills.” 

The bank noted that the company beat Q1 expectations but its second quarter guidance was “appropriately soft.”

The analysts also highlighted Macy’s relatively attractive debt profile. “Macy’s liquid bonds trade in the high-6% YTW range for the ‘29s and 7-9.2% for the longer bonds, all cheap to their double-B rating,” the note stated. 

JPMorgan views the bonds as undervalued relative to comparable BB-rated retail debt.

In the credit market, the firm upgraded Macy’s five-year CDS from Short Risk to Neutral Risk, citing improved visibility following recent consumer and tariff uncertainty. 

However, JPMorgan cautioned that a “severe consumer downturn or higher tariff outcome than current levels” remains a key downside risk.

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