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>>> Tiffany Stock Upgraded on Improving Luxury Trends


Rachel Graf

Jan 13, 2017



https://www.thestreet.com/story/13953875/1/tiffany-stock-upgraded-on-improving-luxury-trends.html?puc=yahoo&cm_ven=YAHOO




Richemont's better-than-expected third-quarter sales indicate that demand trends for luxury goods are stabilizing, a positive for Tiffany & Co.'s (TIF) top line, Wells Fargo analysts said in a note today.

The firm upgraded Tiffany shares to "market perform" from "underperform," sending the stock about 2.5% higher to $82.57 in early Friday afternoon trading.

The global luxury retail market appears to have bottomed in the first half of 2016, with improvement in most geographies and categories in the second half of the year, Wells Fargo analysts noted.

Notably, Swiss jeweler and watchmaker Richemont posted a 5% increase in third quarter sales on Thursday, driving shares of New York City-based Tiffany and European luxury brands including Prada (PRDSY) , Luxottica (LUX) and Swatch (SWGAY) to close Thursday's trading session in positive territory.

"While it remains to be seen how robust the recovery in the global luxury market will be, at the very least the sharp declines that weighed on late-2015/early-2016 have moderated and the outlook for luxury is more favorable than it's been in at least 18-24 months," Wells Fargo analysts wrote today.

Tiffany could also benefit from House Speaker Paul Ryan's proposed border tax adjustment.

The retailer generates a high percentage of sales outside of the U.S., imports a small percent of cost of goods sold, is a high-margin business, has a relatively high tax rate and has consistently demonstrated pricing power, according to Wells Fargo.

Tiffany is expected to report December sales before Tuesday's market open.