Signet Jewelers (SIG) PT, Estimates Raised at Wells Fargo Following Better-than-Expected Q3
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Wells Fargo analyst Ike Boruchow reiterated an Outperform rating and boosted estimates and his valuation range on Signet Jewelers (NYSE: SIG) to $108-$110 (from $100-$105) following were better-than-expected results and outlook.
Boruchow commented, "SIG's Q3 results were better-than-expected (both comps and EPS above guidance), and although it’s the smallest quarter of the year (less than 5% of annual EPS), the stabilization of business trends should be a welcome sight. Perhaps more importantly, the Q3 top-line outperformance means that SIG is no longer guiding to sequential comp improvement in Q4 (Q3 was -2% while Q4 guide calls for -2% to -4%) - making the outlook for the largest selling period of the year (55% of annual EPS) far more credible. While the company is not out of the woods just yet (Q4 is projected to be the third consecutive negative-comp quarter), we are encouraged by the fact that: 1) top-line trends appear to be stabilizing, 2) management is now flexing the SG&A line (SG&A -3% in dollars), 3) substantial Zale synergies are still on the horizon and 4) the credit overhang may finally dissipate (they will either sell the AR book or their accounting will change if they keep the business). All in, we continue to view risk/reward favorably on SIG shares (market leader trading at a discount). We are adjusting FY17/FY18 EPS estimates to $7.45/$7.98 (from $7.08/$7.94) and valuation range to $108-$110 (from $100-$105). We remain hopeful that a more meaningful inflection in the business lies ahead in 2017, and we reiterate Outperform."
Shares of Signet Jewelers closed at $88.88 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesWells Fargo, Ike Boruchow
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