Credit Suisse: Nordstrom Card Portfolio Sale To Net $1.3 Billion

Nordstrom, Inc. (NYSE: JWN) is likely to benefit from the pending sale of its $2.2 billion portfolio of credit card receivables and use proceeds to buy back shares, an analyst said Tuesday.

Credit Suisse's Michael Exstein boosted his target on the department store company by 9 percent to $85, while maintaining an Outperform rating.

Nordstrom announced plans to sell the portfolio in May and more recently said a deal with a financial institution is in "advanced stages."

Exstein estimates Nordstrom will net $1.3 billion from the deal.

"The vast majority of proceeds are likely to be used for share buybacks," according to Exstein, who noted that Nordstrom's management has "indicated comfort" with its current debt levels.

Resulting buybacks could boost 2015 earnings per share by 4 percent to 5 percent, Exstein said.

Apart from the pending deal, Exstein said Nordstrom's capital spending will hit a peak in 2015 when it opens four new stores. Results will benefit in 2016 with an accelerating top-line growth and lower spending.

Nordstrom changed hands recently at $78.80, up 1 percent.