Q4 Preview: Modest Beat for Fossil (FOSL) Seems Priced In, Investors Await Guidance

FREE Breaking News Alerts from StreetInsider.com!

FOSL Hot Sheet

Rating Summary:
7 Buy, 5 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0

Traders are bidding up shares of Fossil (Nasdaq: FOSL) rather sharply Monday afternoon, dipping in a toe or two in ahead of the watch and jewelry designer's fourth-quarter results. The report is expected out Tuesday morning before the opening bell.

The Street is currently anticipating quarterly earnings of $1.77 per share on sales of $841.41 million. Fossil posted fourth-quarter earnings of $1.46 per share during 2010, and a per-share profit of $1.09 last quarter.

According to data from Bloomberg, analysts are mostly bullish on Fossil shares heading into the results: 11 firms have Buy ratings, five have Holds, and none suggest selling the stock. The lowest price target on the Street is $87 while the highest target sits at $130; the price target average is $109.

Analyst Comments:

JPMorgan - Overweight rating, $108 price target. Looking for EPS of $1.76.

The firm recently commented on Fossil following a sharp rally in the stock over the last few weeks (nearly 31 percent YTD). The firm noted: "1) no negative pre-announcement and a 'business as usual' tone at the ICR conference, 2) an announcement of agreement to acquire Skagen Designs and 3) the recent 4-5% rally in the Euro have led to a massive short squeeze as short interest had increased 30% over the previous 30 days...Despite the move, we think sentiment remains fairly negative on the name and while the near-term could be choppy we think that better than feared Europe (and FX translation), Skagen acquisition accretion and pricing on core product this holiday could be enough to put the bear case to bed for the time being."
Brean Murray - Hold rating. Sees earnings of $1.77 per share.

"We are basically assuming in our 4Q projections that higher SG&A leverage in the Holiday quarter is enough to offset the gross margin drag from higher Japanese watch movement and Chinese labors costs and produce similar top and bottom line expansion..." Brean Murray believes its first-quarter estimates could prove to be conservative, but also said "management guidance for first-quarter and 2012 will be below aggressive Street expectations."
Jefferies – Buy rating, $120 target. Expecting EPS of $1.77.

“We continue to believe FOSL is in the early phase of an accelerating multi-year growth story and believe the company was a big winner this holiday season as the watch trend remains hotter than ever."
Benchmark - Buy rating maintained, $115 price target. Looking for fourth-quarter EPS of $1.78.

Expecting strong International results, "with strength in Asia and Latin America and even growth in Europe." Anticipating financial details of the Skagen purchase. The firm sees Fossil distributing Skagen watches, cutting out the middle-man and capturing that profit for itself."

Check out our EPS Insider portal to see all the upcoming quarterly reports, or visit our Earnings category to get all the latest-breaking news in real time.

Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!