We reiterate our long-term Neutral recommendation on
Tiffany & Company
), the designer, manufacturer and retailer of fine jewelry, with
a target price of $83.00, following its better-than-expected
first-quarter fiscal 2013 results attributable to a surge in
demand in the Asia-Pacific region. The company also currently
holds a Zacks Rank #3 (Hold).
Tiffany delivered the second consecutive quarter of positive
earnings surprise - after 4 straight quarters of
lower-than-expected earnings - on May 28, wherein earnings of 70
cents a share surpassed the Zacks Consensus Estimate of 53 cents
by 32.1%, and rose 9.4% from the prior-year quarter.
Tiffany's net sales of $895.5 million climbed 9% from the
year-ago quarter, and came ahead of the Zacks Consensus Estimate
of $862 million.
We believe Tiffany is well positioned to support robust sales
and earnings growth in the long run by leveraging on capital
investments made over the past several years in distribution,
manufacturing and diamond sourcing processes. Moreover, with
nearly half of the total sales generated internationally, we
believe that the company is well diversified from a regional
perspective as well. Tiffany's long-term growth prospects remain
encouraging, given its new product launches and focus on
enhancing its geographic reach through store expansion
Tiffany remains committed to attain long-term objectives of at
least 15% earnings growth and a 10% to 12% sales increase
annually. Management now projects earnings per share to mark an
increase of 6% to 9% and total net sales growth in the mid-single
digits in fiscal 2013.
While these create a positive bias on the stock, the near-term
headwinds, such as soft sales trends in the Americas, effects of
a depreciated Japanese yen on results, and sluggishness
witnessing in the silver business neutralize it.
The company's customers remain sensitive to macroeconomic
factors including interest-rate hikes, increase in fuel and
energy costs, credit availability, unemployment levels, and high
household debt levels, which may negatively impact their
discretionary spending, and in turn the company's growth and
Other Stocks to Consider
The stocks worth considering in the non-food retail, wholesale
Lumber Liquidators Holdings Inc.
Bon-Ton Stores Inc.
) all of which carry a Zacks Rank #1 (Strong Buy). These
companies are expected to continue with their upbeat
BON-TON STORES (BONT): Get Free Report
CONNS INC (CONN): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
TIFFANY & CO (TIF): Free Stock Analysis
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