Piper Jaffray Cuts Price Target on Fossil Group (FOSL) to $60 Ahead of 2Q Earnings

Piper Jaffray maintained an Underweight rating on Fossil (NASDAQ: FOSL), and cut the price target to $60.00 (from $65.00), ahead of its 2Q earnings release. Analyst Erinn Murphy is expecting an in-line quarter, but sees a possible risk to Q3 guidance as the company laps a large quarter last year. Piper Jaffray has lowered its 3Q EPS estimates to $1.48 (from $1.59). FOSL is scheduled to report earnings on August 11th, after the close of markets.

Murphy commented, "Heading Into Fossil's Q2 earnings call slated for tomorrow post-close, we are maintaining our Underweight rating as we continue to see headwinds for not only the watch category but also for Michael Kors, the company's single-largest licensed brand. For Q2, we are looking for an in-line quarter but see risk to Q3's guidance as the company laps a large sell-in quarter last year. We believe sell-through rates have likely underperformed sell-in. As such, we are lowering our Q3 EPS from $1.59 to $1.48. With what we believe will be on-going investments coupled with a lackluster topline, we are reducing our forward estimates. FY16 moves from $5.90 to $5.42. Our UW rating is structural in nature and is predicated on three prongs: 1) underlying watch cycle fatigue; 2) brand fatigue (Fossil and KORS in North America); and 3) needed investment in China distribution, the namesake Fossil brand and wearables."

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 $64.27 yesterday.

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