Signet Jewelers: Analyst Recommendations after Fiscal Q1 2019

‘Neutral’ recommendation maintained

Analysts have maintained their “neutral” stance on Signet Jewelers (SIG) after its fiscal first quarter of 2019 earnings release on June 6. However, given the company’s impressive performance in the quarter, Cowen raised its target price for Signet stock to $55 from $40.

Signet surprised analysts with a first-quarter profit. Analysts were expecting the company to report a loss. An improving sales trend across most of its core brands and an improvement in credit transition in its stores are showing some stabilization.

Signet Jewelers: Analyst Recommendations after Fiscal Q1 2019

Management expects sales to improve in the second half of the fiscal year, led by improvement across core banners since operational challenges are likely to dissipate. Higher sales and cost-savings are expected to support Signet’s bottom line.

However, in the near term, tough year-over-year comparisons, lower transactions, and increased sales of low-margin products are expected to hurt its sales and earnings growth rate.

Ratings and target price

Of the 12 analysts covering Signet stock, 92% of them are maintaining a “neutral” recommendation, while 8% are recommending a “buy.” The company’s restructuring plan has started to take hold. However, credit transition issues persist, at least in the near term, which keeps analysts on the sidelines.

Analysts are keeping their price target at $$43.44 for Signet stock, which is 16.9% lower than SIG’s closing price of $52.27 on June 6.

In comparison, analysts have a “buy” recommendation on Tiffany (TIF) stock.