Fossil (FOSL) PT, Estimates Cut at Mizuho Following More Weak Results
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Mizuho Securities analyst Betty Chen cut estimates and lowered her price target on Fossil (NASDAQ: FOSL) to $25.00 (from $29.00) following weak results and outlook. The firm maintained a Neutral rating.
Chen commented, "We are lowering our estimates and PT to $25 (from $29) on a lower guidance range given weak traditional watch demand and softness in jewelry/leather goods. While we acknowledge FOSL's success in integrating Misfit and launching 100+ wearable SKUs across 8 brands, the growing wearable business may be laden with risk from production/supply chain, user adoption, and lower gross margin. We also question the timing of profit improvement initiatives that require heavy, upfront cash charges. With uncertainty related to wearables, FOSL may continue to trade at a discounted ~12x multiple."
The firm's Our 4Q EPS estimate declines to $1.30 from $1.40 reflecting 0% global retail comps and EBIT margin of 8.5%, relative to guidance for $1.07-1.57. They are also cutting FY16 and FY17 EPS estimates to $1.90 and $2.05 from $2.00 and $2.40, respectively.
Shares of Fossil closed at $24.71 yesterday.
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