Cowen Cuts Price Target on Fossil Group (FOSL) to $25 as Core Watch Business Remains Weak
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Cowen maintained a Market Perform rating on Fossil Group (NASDAQ: FOSL), and cut the price target to $25.00 (from $30.00), following the company's 3Q earnings report. On the call, management highlighted that initial demand for the new Michael Kors ACCESS line has exceeded expectations. The company is already stretching its supply chain to chase greater demand. However, FOSL has seen a significant deceleration in Kors' watch business given tough compares from outsized growth and outperformance of traditional Michael Kors watches. The stock traded down -MSD after the market close following the 3Q EPS print given management lowered top-end of FY16 guidance to reflect latest trends.
Analyst Oliver Chen commented, "FOSL's core watch business still weak & mgmt lowers FY16 guide, but 3Q offers several encouraging points: clean inventories, broad-based seq. top-line improvement led by expanded wearables offering, new Kors ACCESS exceeding expectations. Reit. Market Perform w/ new $25PT (was $30) as stock likely to stay range-bound on execution risk in wearables & New World Fossil ($200mm op improvement oppty)."
Shares of Fossil closed at $24.71 yesterday.
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