Piper Jaffray Cuts Price Target on Fossil Group (FOSL) Following Michael Kors (KORS) Q4 Results
Piper Jaffray reiterates an Underweight rating on Fossil (NASDAQ: FOSL), and cuts the price target to $65.00 (from $72.00), following Michael Kors (KORS) Q4 earnings report. Analyst Erinn Murphy says that continued deceleration of Michael Kors (KORS) watches will likely present near-term pressure for FOSL.
Murphy commented, "We are reiterating our Underweight rating and lowering our PT from $72 to $65 following Michael Kors' Q4 earnings report. Michael Kors noted watches were a significant drag on their North American comp which was down 6.7%. In addition, KORS mgmt continues to believe North American watch sales will remain soft this year as the category has matured and as consumer tastes shift toward jewelry. While the growth in jewelry benefits Fossil, we note it is a much lower ASP. Recall, Michael Kors as a brand is 26% of Fossil's revenue and we believe watches contribute ~85% of sales. While trends in Europe are better than NA and while Fossil has a multi-brand portfolio, we believe the Michael Kors softness could pressure estimates in 2H and prevent multiple recovery on shares. As such, we are lowering our FY15 EPS from $5.55 to $5.42 and FY16 from $6.04 to $5.90."
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Shares of Fossil closed at $70.77 yesterday.