Analysts maintain a favorable outlook
Most of the analysts covering Tiffany (TIF) stock maintain a favorable outlook. Tiffany started the year on a strong note and raised the full-year guidance, which is encouraging. The company’s top line is projected to benefit from the continued strength in the Asia-Pacific region, new design launches, omnichannel offerings, and a rise in local customer spending.
Meanwhile, strong sales and lower diamond acquisition costs are likely to drive margins higher. Also, analysts expect Tiffany’s bottom line to see healthy growth in fiscal 2018, reflecting higher sales and margins, share buybacks, and a lower effective tax rate.
However, the strengthening of the US dollar poses a threat. Recently, Oppenheimer downgraded Tiffany stock from “outperform” to “perform,” citing the adverse impact on tourist spending due to the strengthening of the US dollar.
Meanwhile, Tiffany stock was trading at a forward PE multiple of 26.8x on August 23, which is ~26% higher than its four-year average multiple of 21.3x. Also, Tiffany stock is trading at a premium to the benchmark index and rival Signet Jewelers (SIG) stock. Both the S&P 500 Index and SIG stock were trading at a forward PE of 17.2x.
Rating and target price
Among the 28 analysts covering Tiffany stock, 15 analysts suggest a “buy,” 12 analysts recommend a “hold,” and one analyst has a “sell” rating. Analysts suggest a target price of $137.13 on TIF stock, which indicates an upside of 5.6% to its closing price of $129.83 on August 23.