Cowen Cuts Price Target on Tiffany & Co. (TIF) on Macro and F/X Uncertainty
Cowen maintained an Outperform rating on Tiffany & Co. (NYSE: TIF), and cut the price target to $97.00 (from $103.00), on macro and F/X uncertainty. 2Q C/C comps were solid at +7%, however, analyst Oliver Chen is cautious for 2H given weaker F/X, global uncertainty & wealth effect risk in China/US.
Chen commented, "2Q C/C comps were solid at +7%, above our +3% est., but we're slightly cautious for 2H given weaker F/X, global uncertainty & wealth effect risk in China/US. We like newness for all (esp. silver jewelry), steady FCF (>$400M), clean inventory, & working cap./CRM opportunities. We rate Outperform, but acknowledge tourism & America’s difficult compare reduces some visibility."
Chen also added, "Fashion jewelry (40% of mix) was the strongest performer in 2Q, driven by the continued shift to gold jewelry and Tiffany T collection, which is now 1 year old but still ramping. TIF saw mixed performance out of the statement, fine, and solitaire categories (23% of mix) as substantial growth in high-end statement jewelry (also lower margin) was offset by softness in fine jewelry, while engagement jewelry (27% of mix) was soft. Fashion silver jewelry remains an area of weakness, but increasing newness this fall with new designs in the popular Return to Tiffany collection and a new fall ad campaign featuring new interpretations Victoria & Tiffany Bow collections."
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Shares of Tiffany & Co. closed at $85.08 yesterday.