Luxury jeweler and specialty retailer Tiffany & Co. (TIF) has seen its share rise about 4.5% after posting better-than-expected fourth-quarter earnings on March 17. (See also: Tiffany & Co. Surprises on Q4 Beat.)
In light of a declining U.S. retail market, analysts foresee a necessary revamp of the Tiffany brand presenting upside with new Millennial consumers. Shares of the NYC-based jeweler were up on Monday after earnings on an upgrade by analysts at William Blair. The investment firm lifted its rating on Tiffany’s shares from market perform to outperform, indicating the stock will become more stable and reap benefits from easier comparisons.
Wells Fargo: Jeweler in Need of ‘Fundamental' Shift
Wells Fargo also issued a bullish analyst note on the luxury retailer after its positive quarterly earnings surprise. The firm maintains a market perform rating on TIF, lifting its valuation range from $79 at the midpoint to $94.
“Notably, the company’s partnership with Lady Gaga … seems to have generated some excitement and could drive a solid response to the new "HardWear" collection launching next month,” said Wells Fargo analyst Neil Saunders. Wells Fargo is also optimistic on the appointment of new Chief Artistic Officer, Reed Krakoff, to inject “newness into the assortment.”
Gaga for Gaga
Tiffany’s recent celebrity endorsement and appointment of an innovation executive point to a larger initiative as the firm looks to re-establish itself and produce a “much more distinctive image.” Saunders said Tiffany’s Super Bowl ad featuring pop star Lady Gaga, who Tiffany’s describes as “fiercely feminine,” was a “good start” in this direction.
Moving ahead, analysts say Tiffany’s recent strategy must be “accompanied by a step-change in products, store environments, and the general approach to selling … There is a need for a more fundamental and deeper shift in the brand’s direction. Tiffany is a brand that is increasingly overlooked by American consumers, especially younger demographics.”