Swatch's lawsuit, which went public in a U.S. District Court in Manhattan on Monday, claims that Target's "Zebra" and "Multi-Color" watches infringe on Swatch's designs. The suit states that Target's quality is "inferior" to Swatch's and that their ongoing sale would likely confuse shoppers and ultimately hurt Swatch's sales. Furthermore, Swatch claims that it informed Target of the issue, but the latter continued the sales anyway.
"By adopting the Zebra Watch trade dress and the Multi-Color Watch trade dress, defendants are unfairly competing" with Swatch, the suit said, according to Reuters.
Despite this news, Target's stock was ticking upward 0.21% to $61.29 at 10:16 a.m. on Tuesday.
TheStreet Ratings team rates TARGET CORP as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TARGET CORP (TGT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.1%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TARGET CORP's earnings per share declined by 44.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TARGET CORP reported lower earnings of $3.07 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.07).
- 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 Multiline Retail industry. The net income has significantly decreased by 45.9% when compared to the same quarter one year ago, falling from $961.00 million to $520.00 million.
- The share price of TARGET CORP has not done very well: it is down 8.14% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
- You can view the full analysis from the report here: TGT Ratings Report