Tiffany Gets Buy Rating From Wells Fargo
Wells Fargo Securities Initiating Coverage on Tiffany & Co. With BuyRating
SAN FRANCISCO, Jun 5, 2002 /PRNewswire-FirstCall via COMTEX/ -- Paula Kalandiak, luxury industry analyst at Wells Fargo Securities, has initiated coverage on the shares of Tiffany & Co. (NYSE: TIF; $36.30) with a Buy rating and a 12-month price target of $45.
Below are direct quotations from Ms. Kalandiak's research report:
-- We are initiating coverage of Tiffany & Co. shares with a Buy rating
and a price target of $45, or 30.4x our FY03 EPS estimate.
-- We view Tiffany as a core holding based on the company's consistent
execution and brand focus. Tiffany has taken a disciplined approach
to its policy of "growth without compromise," expanding only when it
makes sense, and maintaining control over its brand image, which we
believe is the company's most valuable asset. The Tiffany name has a
long history of association with quality, timeless style, and trust.
Tiffany is led by a strong, seasoned management team that we believe
will successfully steer the company through the currently
challenging economic environment and beyond.
-- The company continues to open new locations at a modest pace,
resulting in at least 5-8% square footage expansion per year, which
we expect to contribute to top-line growth. Furthermore, favorable
demographics (more than 5 million Americans have a net worth of more
than $1 million) and high expected growth of the largest
jewelry-buying demographic in the United States through 2010 should
support increased jewelry sales in this country, for at least eight
more years.
-- We believe that Tiffany's longstanding reputation as a reliable
jeweler offering quality merchandise and timeless style positions
the company to capture additional jewelry spending. We expect
several productivity initiatives, including further manufacturing
and sourcing efficiencies, to yield gross margin expansion, which
should contribute to EPS growth of 10-15% for the next several
years.
-- Shares of Tiffany are currently trading at 24.5x our FY03 EPS
estimate of $1.48, a premium to the luxury industry's average P/E of
18.4x. In our opinion, this premium is warranted given Tiffany's
proven track record as a focused and consistent operator within the
sector, and we believe that the company's consistency in the face of
uncertain times will provide room for further multiple expansion.
-- On May 14, 2002 the company reported its 1Q02 results. EPS of
$0.22 were 10% above the $0.20 that the company had earned in 1Q01
and in line with its upwardly revised guidance. Revenues increased
by 3.2% from 1Q01 revenues to $347.1 million, with each of the
company's three divisions showing growth above 1Q01 results.
Wells Fargo Securities, LLC is a full service investment banking firm. Headquartered in San Francisco with offices in Southern California, the Pacific Northwest and East Coast, Wells Fargo Securities is dedicated to long term relationships using the strength of its equity capital markets and Wells Fargo & Company products to provide outstanding service and support to its clients.
Investments made through Wells Fargo Securities: (1) are not insured by the FDIC; (2) are not deposits or other obligations of, or guaranteed by, Wells Fargo Securities, Wells Fargo & Company or any of its affiliates; (3) are not guaranteed by any Federal governmental agency (excluding U.S. Government and federal agency securities); and (4) are subject to investment risks, including possible loss of principal amount invested.
The study on these pages is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed herein reflect the judgment of the author at this date and are subject to change without notice. Facts have been obtained from sources considered reliable, but are not guaranteed. Wells Fargo Securities, its directors and employees and their families may have a position in the securities of the companies described herein, and may make purchases or sales while this report is in circulation. Additional information is available upon request.
Wells Fargo Securities, LLC is a member of the National Association of Securities Dealers, CRD number 7665.
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SOURCE Wells Fargo Securities, LLC
CONTACT: Justine Davies of Wells Fargo Securities, +1-415-954-0671
URL: www.fsvk.com
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