Bernstein Boosts Tiffany To Outperform On Silver Jewelry, Attractive Valuation

In a report published Tuesday, Bernstein analyst Anne-Charlotte Windal upgraded the rating on

from Market Perform to Outperform, while raising the price target from $100 to $108. The analyst believes that the stock's risk/reward profile and valuation are attractive. Although the analyst expressed concern regarding Tiffany's ability to attain positive comp stpre sales growth in the Americas over the next two quarters, she did express her optimism regarding the continued focus on the entry price point for the company's silver jewelry business. "In the long term, our outlook for the company remains positive on solid sector fundamentals, and with opportunities to evolve and reinvigorate the product assortment and the brand," analyst Windal stated, adding, "As we get closer to an easy compare in Q4, we believe the risk of a significant pull back on potentially soft Q2 and Q3 results is moderating." Among the positives for the company are its strong sector fundamentals, with Tiffany holding a strong brand and market position in the luxury jewelry category, along with a favorable regional mix. In addition, there is room for substantial square footage expansion opportunities for Tiffany Outside the Americas and Japan. "We view the T collection, modern and sophisticated, as a welcome addition and update to the Tiffany assortment. It gives Tiffany stronger presence in the higher-priced gold fashion jewelry segment, which has been a big focus (and volume driver) for competitors," analyst Windall added. The company has also continued to focus on marketing its $500 and under product category, with the launch of the "Little Luxuries" campaign. The analyst believes that there is room for further improvement in gross and operating margins for Tiffany. In addition, ROIC improvements are expected to boost the stock valuation, over time.