Shares of Nordstrom (JWN) are rising after an analyst at JPMorgan upgraded the stock, noting Nordstrom's strong finish to 2017 and the best holiday season in three years.

ANALYST UPGRADE: JPMorgan analyst Matthew Boss upgraded Nordstrom to Neutral from Underweight and raised his price target for shares to $50 from $33. The analyst believes his "more cautious multi-year fundamental view" is now priced in with the stock underperforming the S&P 500 Index by 40% since December 2016. He added the company has moderated its top-line profile to low-to-mid-single digits, has maintained a "differentiated retail profile" and is becoming a distribution destination with partnerships and focused investments in service, store experience, and technology. The analyst also said he expects fourth quarter same-store sales to be at or exceeding Street consensus of 0.5% and an approximately 30% increase in fiscal year 2018 free cash flow due to the corporate tax rate reduction. Boss, who also noted December foot traffic improved low-to-mid single digits vs. November for the best two-year stack since the second quarter, said the free cash flow could be reinvested as a public company or used to service debt payments if the company decided to go private.

HOLIDAY SALES COULD BREAK RECORDS: Analytics firm RetailNext said that preliminary numbers indicate that U.S. holiday sales will exceed the firm's initial forecast of a 3.8% increase from last year and break sales records, Reuters reported on December 26. The company and most other such firms and industry groups -- including Adobe (ADBE) Analytics and the National Retail Federation -- regularly publish holiday sales data in January. Publicly traded department store operators include J.C. Penney (JCP), Kohl's (KSS), Macy's (M), Nordstrom and Sears (SHLD) AND "Big box" retailers include Best Buy (BBY), Costco (COST), Target (TGT) and Walmart (WMT).

CONSUMER CONFIDENCE HIGH: On December 25, MasterCard (MA) SpendingPulse reported that holiday sales increased 4.9% this year, setting a new record for dollars spent, producing the largest year-over-year increase since 2011 and further indicating consumer confidence. Online shopping also saw large gains of 18.1% compared to 2016, boosted by a late-season rally. Specialty apparel and department stores saw moderate gains, which is particularly impressive given recent store closings. Additionally, MasterCard SpendingPulse noted that shoppers were also still spending late into the season, with December 23 next to Black Friday in terms of single-day spending.

NORDSTROM IN THE NEWS: On October 26, members of the Nordstrom family suspended active exploration of the possibility of proposing a transaction to take the company private. The company said it intended to continue its efforts to explore the possibility of making a going private proposal after the conclusion of the holiday season.

PRICE ACTION: Nordstrom rose 3.8%, or $1.80, to $49.18 in morning trading.