Fossil (FOSL) Stock Falls, Topeka Capital Markets Slashes Price Target
NEW YORK (TheStreet) -- Fossil Group (FOSL) - Get Report stock is sliding by 2.73% to $31.50 on heavy volume in early afternoon trading on Monday, after Topeka Capital Markets lowered its price target to $60 from $110 on the stock.
The firm maintained its "buy" rating.
On Thursday, Fossil reported earnings of $1.19 per share on revenue of $771.3 million for the 2015 third quarter, and forecast net sales for the current quarter to decline between 7% and 16%. Analysts are expecting a decline of just 4%.
The most recent quarterly results topped expectations, but the lowered guidance is exacerbating uncertainty about the watch industry, Topeka Capital Markets said in a note.
Fossil's acquisition of Misfit, announced last week, should propel growth, but not before the second half of fiscal 2016, the firm added.
"With the short-term outlook more cautious, FOSL fell a whopping 37% on 11/13, way overdone in our view, putting FOSL at a tough multiple, despite its dominance in its category globally, albeit one facing challenges at present," Topeka Capital Markets noted.
Based in Richardson, TX, Fossil is a global designer, marketer and distributor company that specializes in consumer fashion accessories.
About 5.29 million shares of Fossil have been traded so far today, nearly triple the company's average trading volume of about 1.95 million shares a day.
Separately, TheStreet Ratings team rates FOSSIL GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate FOSSIL GROUP INC (FOSL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for FOSSIL GROUP INC is rather high; currently it is at 56.72%. Regardless of FOSL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.45% trails the industry average.
- FOSL, with its decline in revenue, underperformed when compared the industry average of 15.6%. Since the same quarter one year prior, revenues fell by 13.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to -$28.01 million or 166.04% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 44.5% when compared to the same quarter one year ago, falling from $103.72 million to $57.53 million.
- You can view the full analysis from the report here: FOSL
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.