Oppenheimer Cuts Price Target on Fossil Group (FOSL) Seeing 'More Headwinds than Tailwinds
Oppenheimer maintained a Perform rating on Fossil (NASDAQ: FOSL), and cut the price target to $70.00 (from $85.00), seeing "more headwinds than tailwinds". After 3Q15 sales guidance for down 10-15%, annual guidance for -4-8% embeds sales growth in 4Q15. Analyst Anna Andreeva lowered '15/'16 EPS to $5.25/$4.50, with EBIT margins at 11.8% and 10.6% respectively, lowest levels since '05.
Andreeva commented, "Watch category is decelerating further globally (Europe & Asia missed expectations in 2Q15, constant currency watches flat vs. up LSD in 1Q15), as after five years of strong growth, we believe there's still a lot of unwinding ahead. FOSL is embracing wearables (first product under Fossil brand launching already this fall; own stores & wholesale doors); with already 50% market share of traditional watches <$1,000, it could take time to find its footing as industry dynamics change. Lowering EPS estimates; '16 should benefit from some forex pressure abating ($1.05 in '15E, 17% hit to EPS), sales visibility is limited, and investments continue; '16 likely another down earnings year (modeling $4.50 EPS, <11% EBIT margins)."
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Shares of Fossil closed at $62.11 yesterday.