KeyBanc Upgrades Fossil (FOSL) to Overweight

November 16, 2016 6:56 AM EST
Get Alerts FOSL Hot Sheet
Price: $33.72 -2.6%

Rating Summary:
    8 Buy, 14 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 36 | New: 11
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KeyBanc upgraded Fossil (NASDAQ: FOSL) from Sector Weight to Overweight with a price target of $42. Analyst Edward Yruma noted momentum in wearables.

"We believe that strong momentum in wearables can continue, we peg it at a $175M-$225M opp over the next 12 mos, and move to OW. We downgraded FOSL to UW on 1/10/14 based on our thesis that watches were in a period of secular weakness. Earnings fell from $7.10 (2013) to $2.05 (2016E). However, we believe that FOSL is approaching a key sales inflection point. 0.7x EV/sales remains close to trough levels, establish a $42 PT," said Yruma.

"We conducted over 150 checks and consistent with the FOSL/KORS earnings calls, reception to the new wearables remains very strong. Standouts include the Rose Gold KORS Bradshaw ($350) and the Gunmetal (Smoke) FOSL Marshal ($315). We now believe that wearables can drive $175M-$225M in rev, which could drive $0.50+ in EPS. For context, Fitbit (SW; Erickson) should do approximately $2.4B in rev, and Apple (OW; Hargreaves) $4.3B in Apple Watch sales. We raise our FOSL 2016E EPS to $2.05. LT, we think wearables could be a $1B+ opportunity," added the analyst.

For an analyst ratings summary and ratings history on Fossil click here. For more ratings news on Fossil click here.

Shares of Fossil closed at $32.92 yesterday.



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