Will This Earnings Report Be a Turning Point for Tiffany?

August 24, 2016 by Chris Lange

jewelry
Source: Thinkstock
Tiffany & Co. (NYSE: TIF) is scheduled to report its fiscal second-quarter results before the markets open on Thursday. Despite having a relatively weak performance so far in 2016, this could be the turning point for this jewelry retailer. Looking at other high-end retailers, most have seen a solid gain over the summer, especially after they reported earnings. Will this trend continue on to Tiffany?

The consensus estimates call for $0.72 in earnings per share (EPS) on $934.74 million in revenue. The same period of last year reportedly had $0.86 in EPS on revenue of $990.5 million.

In previously issued guidance, the company said that expects diluted EPS in the second quarter to decline by a similar rate as occurred in the first quarter (roughly 15% year over year).

As expected, the first quarter was difficult in terms of both sales and earnings growth. Tiffany faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the United States and Asia, particularly in Hong Kong.

From a strategic perspective, management believes that that its initiatives will enhance the company’s ability to provide customers with extraordinary products and experiences and ultimately contribute to improved financial results as the year goes on. Perhaps we can start to see these results in this earnings report.

Ahead of the upcoming report, analysts weighed in on Tiffany:

  • Mizuho reiterated a Buy rating with a $72 price target.
  • Morgan Stanley reiterated a Hold rating.
  • Jefferies reiterated a Buy rating.
  • Wells Fargo reiterated a Sell rating with a $58 price target.
  • Cowen reiterated a Hold rating with a $68 price target.
  • Macquarie reiterated a Buy rating.
  • Deutsche Bank reiterated a Hold rating.
  • Goldman Sachs reiterated a Neutral rating with a $69 price target.
  • Topeka Capital Markets has a Buy rating with an $84 price target.

Tiffany has underperformed the broad markets, with the stock down 8% year to date. Over the past year, the stock is actually down nearly 15%.

Shares of Tiffany were trading up 1% at $69.91 on Wednesday. The stock has a consensus analyst price target of $73.54 and a 52-week trading range of $56.99 to $85.25.

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