03:36 PM EDT, 08/06/2024 (MT Newswires) -- Dillard's (DDS) quarterly report is not expected to cause significant changes to its price-to-earnings ratio, UBS said in a note emailed Tuesday.

"We believe [Dillard's] comp sales have decelerated given tough macro dynamics and ongoing share loss against other retailers," UBS said.

UBS expects minimal movement in Dillard's stock following its Q2 earnings report, as the company is "unlikely" to provide 2024 guidance, UBS said, adding that despite a likely in-line gross margin, weak sentiment surrounding the stock may limit significant changes in its price-to-earnings ratio.

Sentiment on Dillard's is "bearish," and the company's stock has dropped 16%, is underperforming peers, and remains heavily shorted, UBS said, adding that it projects Q2 comparable sales growth of -1% to -3% year-over-year and a flat to 50 basis points gross margin expansion.

"One positive data point is Dillard's promotional intensity declined y/y in May-June, which suggests its retail gross margin remains resilient," UBS said. A lower promotional intensity might support margins, leading UBS to forecast Q2 EPS of $6.15, above the $5.95 consensus, it added.

UBS maintained a sell rating on Dillard's with a 12-month price target of $202.

Price: 379.30, Change: +19.85, Percent Change: +5.52