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Could Analysts Lower Their Target Prices on SIG Stock?

Amit Singh - Author

Nov. 23 2017, Updated 9:02 a.m. ET

Target price summary

After Signet Jewelers (SIG) reported weaker-than-expected fiscal 3Q18 results, Wells Fargo (WFC) downgraded the stock to “market perform” from “outperform” and lowered its target price to $60.00 from $75.0 per share. SIG stock closed at $52.79 on November 21, 2017, which reflects an upside potential of 26.6% to the analysts’ 12-month price target of $66.82 per share.

However, given the company’s soft performance and dim outlook on the sales and EPS (earnings per share) fronts, more analysts could lower their price targets on Signet Jewelers stock.

Signet Jewelers’ top line is expected remain soft as a decline in comps is expected to subdue its growth. The credit portfolio transition at Kay Jewelers contributed to this pressure.

Low customer transactions and its decreased net square footage growth rate could further dent its prospects. Given the challenges, Signet Jewelers’ management expects its comps to decline in fiscal 2018.

Moreover, Signet Jewelers’ margins are expected to decrease, reflecting low merchandise margins due to the mix shift. However, a low tax rate and share repurchases could positively impact its bottom-line results.

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Rating summary

Of the 13 analysts covering Signet Jewelers (SIG) stock, 69.0% recommended a “hold,” and 31.0% maintained a “buy” rating. Analysts provided a consensus score of 2.6 on SIG stock on a scale of 1.0 to 5.0. A score of 1.0 reflects a “strong buy,” while 5.0 stands for a “strong sell.”

In comparison, the majority of the analysts covering Tiffany & Co. (TIF) stock maintain a “neutral” recommendation.


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