Dillard's To Cut Debt, Buy Stock -Credit Suisse

Credit Suisse has upgraded Dillard's, Inc.(NYSE: DDS) to Outperform with a target price of $70 on the company's decade-long consistency in capital allocation.

"While we do not expect a significant improvement in reported profitability, we believe the company will continue to reduce overall debt and buy back stock, effectively reducing the enterprise value," analyst Michael Exstein wrote in a note.

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Over the last six years, the company has bought back $2.2 billion worth of shares. Exstein noted that, as a percentage of market capitalization, DDS's share repurchase for the past six years amounts to 108 percent of its current market cap, "which is the second largest in the department store space on a percentage basis, only after SSI (+154 percent)."

The analyst's new price target is $70 is based on FY2 EV/EBITDA of 4.8x, the lowest valuation in the group (other than Stage Stores Inc (NYSE: SSI)) and at the low end of its historic trading range.

Shares of Dillard's were up 4.98 percent at $61.03 at time of publication.

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