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Signet Jewelers: Analysts Maintain a ‘Neutral’ Outlook

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Analysts’ target price

The following graph shows that analysts continue to lower their target price on Signet Jewelers (SIG) due to the company’s sluggish performance in the past several quarters. Following Signet’s fiscal 4Q18 results and dismal fiscal 2019 outlook, RBC lowered its target price to $38 per share from $55. Meanwhile, Instinet lowered its target price to $45 from $62.

Signet Jewelers continues to disappoint investors with its sales and earnings performance. The company’s top line is expected to decline in coming quarters, which reflects disruptions due to the credit portfolio outsourcing and reduced net selling space with planned store closures. Signet Jewelers’ bottom line is also expected to mark a YoY decline as lower sales, a negative mix, and credit portfolio transition will likely hurt its growth rate.

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Signet Jewelers embarked on a three-year restructuring plan aimed at enhancing sales and driving profitability through closing underperforming stores, its omnichannel presence, and focusing on innovation-led new product launches. However, analysts think that the company’s restructuring efforts are costly.

Notably, Signet Jewelers’ transformational plan entails a preliminary pretax charge of $170 million–$190 million over the next three years. Of these charges, $125 million–$135 million is expected to be incurred in fiscal 2019. Meanwhile, the company’s top line will likely remain pressured.

Rating summary and target price

Of the 13 analysts providing the ratings on Signet Jewelers stock, 83.0% recommended a “hold” and 17.0% recommended a “buy.” Meanwhile, analysts have a target price of $52.45 per share on Signet Jewelers stock, which reflects an upside of 37.2% to its closing price of $38.22 on March 14, 2018.

In comparison, most of the analysts remain positive on Tiffany’s (TIF) stock.

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