Fossil Group (FOSL) Surges on Short Squeeze
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Fossil Group, Inc. (NASDAQ: FOSL) reported what some are describing as a 'low quality beat' and provided dismal guidance, yet shares are up nearly 30%. The upside, according to Nomura analyst Simeon Siegel, is likely related to a short squeeze.
Fossil reported Q4 EPS of $1.46, $0.16 better than the analyst estimate of $1.30. Revenue for the quarter came in at $992.3 million versus the consensus estimate of $923.86 million. The company sees Q1 2016 EPS of $0.05-$0.20, versus the consensus of $0.42. They see FY2016 EPS of $2.80-$3.60, versus the consensus of $3.18.
"We believe FOSL's better-than-feared 4Q results came as a surprise, likely triggering a short squeeze in an already challenging environment," Siegel commented. "On the back of 4Q's less-bad revenues, we expect 1Q's guidance for decelerating topline may prove slightly conservative; however, we believe the remainder of the year hinges on hopes for improved customer reception to product (mainly wearables), absent which we expect returning to EPS growth may prove elusive. With shares trading at 13x our FY17 estimate in the aftermarket, we remain Neutral as we await greater clarity on future topline trends."
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