Most analysts maintain a ‘hold’
Most of the analysts providing recommendations for Signet Jewelers (SIG) stock are maintaining a “hold” rating. In the near term, persisting sales and margin headwinds are expected to hurt the company’s financials and, in turn, its stock.
Signet’s management expects its top line to remain muted, reflecting lower sales due to an anticipated decline in the number of transactions. Earnings are expected to take a hit from lower sales and adverse mix. However, improvement in the Zale division and a lower effective tax rate should support the company’s financials. Signet’s management announced a three-year restructuring plan aimed at driving long-term growth for the company, which is a positive.
Ratings and target price
The graph above shows that analysts have downgraded Signet stock to “neutral” in the past several months. The company’s tepid performance and weak outlook led them to lower their price targets. Of the 12 analysts covering Signet stock, only one has given it a “buy” rating, and 11 have rated it a “hold.” Analysts suggest a target price of $38.44 for the stock, which implies a downside of 9.8% based on its closing price of $42.61 on June 1.
In comparison, most of the analysts covering Tiffany (TIF) stock have given it a “buy” recommendation, given the company’s strong sales and earnings outlook.