Macy's  (M Get Macy's Inc Report is "structurally transforming its business," according to a Cowen analyst, who upgraded the retailing icon to outperform from market perform and boosted his price target to $27 a share from $23.

Shares of the New York company, which also owns the Bloomingdale’s and Bluemercury department store brands, at last check were up 1.6% to $21.57.

Analyst Oliver Chen said in a research note that Macy's "is structurally transforming its business." 

The retailer is well-positioned to drive higher engagement with customers and efficiency through higher digital penetration, store closings, a digital-centric loyalty program, and prudent inventory and pricing management.

"Deepening consumer engagement is key to unlock sustained sales and profitability growth," Chen said.

Management's initiatives to harness "omnichannel capabilities and modernizing the customer experience should contribute to a long-term algorithm of [above low-single-digit] sales."

Macy's, like most other businesses, was severely battered by the Covid-19 pandemic shutdown, as consumers stayed home and the company shuttered stores and laid off worker.

Chen said that Macy's "is making the right strategic changes to drive long-term value creation." 

"We are constructive on the shift to e-commerce and model channel sales reaching 42% by fiscal 2023, which should support both revenues and margin expansion," he said.

Chen said that before the pandemic Macy's digital penetration was about 24%. He now expects penetration to reach roughly 42% by the end of fiscal 2023.

"Macy's' pivot to becoming a digitally-led organization should support top-line growth momentum and customer retention as customers increasingly prefer the convenience of an integrated digital and physical experience," he said.

Macy's Chief Executive Jeff Gennette, speaking Thursday at the Goldman Sachs Annual Retailing Conference, said Macy's had secured $4.5 billion in refinancing "to give us the liquidity that we need moving forward."

"We have completed a major organizational restructuring, resetting our cost base and resources to support our smaller size and greater emphasis on digital," he said.

The CEO said that "while our stores were closed, our digital business accelerated rapidly."

Gennette said that "digital will remain in that 40%-or-higher range," adding that "we were fortunate to head into the pandemic and the store closures with a strong digital business already."

"And I think it goes without saying that a strong digital business is a good thing," Gennette said, according to a transcript of the conference, "but the growing digital profitability is imperative, and that is within our line of sight."

Last month, Macy's posted much stronger-than-expected second quarter earnings and raised its full-year profit outlook while reinstating its dividend.