Fossil (FOSL) PT, Estimates Trimmed at Piper Jaffray; 'Buy' Maintained

Piper Jaffray analyst Erinn Murphy reiterated an Overweight rating on Fossil (NASDAQ: FOSL) but trimmed estimates and her price target to $133.00 (from $142.00) following Q3 results and the Michael Kors renegotiation.

"While the set-up into the print was tough given uncertainty around FX headwinds and North American concerns weighing on sentiment, the company delivered a much better-than-anticipated quarter. More importantly, the company renegotiated its KORS
license--pulling forward the negotiation by a year and extending its relationship to 2024. This announcement removes one of the major overhangs for shares. To terms of the results, Q3 EPS was $1.96 vs. our $1.82 estimate with op margin better than plan
supported by SG&A leverage (vs. expected deleverage). North American wholesale also outperformed expectations with 6.1% growth--a nice pick up from the 1.7% Y/Y growth rate in Q2. Additionally, the company announced a new $1B share buyback. Separately, however, our estimates are coming down for FY15 tied to significant FX headwinds."

The firm trimmed FY 2014 EPS from $7.28 to $7.21 and FY 2015 EPS from $8.35 to $7.80.

For an analyst ratings summary and ratings history on Fossil click here. For more ratings news on Fossil click here.

Shares of Fossil closed at $103.75 yesterday.

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