NEW YORK (TheStreet) --Shares of Tiffany (TIF) - Get Tiffany & Co. Report were gaining 5.29% to $72.51 during mid-morning trading on Thursday as the jeweler posted better-than-expected 2016 second-quarter earnings before Thursday's opening bell.
The New York-based premium retail jeweler posted earnings of 84 cents per share on revenue of $931.6 million. The reported earnings came in above analyst estimates of 72 cents per share. However, revenue fell below projections of $934.7 million.
Oppenheimer retail analyst Brian Nagel appeared on CNBC's "Squawk on the Street" this morning to discuss the company's results and highlight Tiffany in regards to the current retail landscape.
"I've liked Tiffany for a long time, on a long-term basis, but as I look at this report today I very much view it as mixed," Nagel said.
He attributed the "mixed" report to weaker U.S. and European sales this quarter. However, where Tiffany exceeded earnings expectations was in its ability to control costs, Nagel noted.
In light of company's earnings beat this morning, the stock has been gaining during trading today, up as much as 7%. But, Nagel does not feel the company's results should equate to the stocks rise.
"Frankly, I'm a little bit surprised, with these reports, to see Tiffany up 7%, but there seems to be these bounces on weak retail results. What that tells me is that the market is saying that bad news is priced in, which is a good thing," Nagel explained.
Moving forward, Nagel observed two challenges that Tiffany faces.
"I think right now the vast majority of the weakness at Tiffany is macro-related. In my view, we have weakest spending environment in the U.S. and at Tiffany, that's compounded by weak foreign tourism spending on the heels of a strong dollar," Nagel said.
The second challenge is the company's lack appeal to millennials. Millennials are not willing to purchase the lower-end, fashion-forward Tiffany products. However, where Tiffany continues to excel, and what drives the company is its high-end pieces, Nigel concluded.
Nagel maintains an 'outperform' rating on Tiffany.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins.
But the team also finds weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: TIF