Diamonds Are An Investor's Best Friend: Analysts Comment on Tiffany's Dazzling Quarter

Analysts are eager to comment on Tiffany & Co. (NYSE: TIF) following the company's report of a strong first quarter, raised guidance and shares hitting a new 52-week high.

Summary of Q1 Results

• The company saw quarterly earnings of $126 million ($0.97 per share), versus profit of $84 million ($0.65 per share) in the same period last year.
• Sales climbed 13 percent to $1 billion and comparable store sales grew 11 percent.
• Tiffany's total sales in the Americas gained 8 percent to $439 billion while sales in Europe grew 9 percent to $101 million. In the Asian-Pacific region, sales grew 17 percent to $261 million while total sales in Japan surged 20 percent to $174 million.
• Gross margin widened to 58.2 percent from 56.2 percent.

Guidance

• Management raised FY15 earnings guidance from $4.05- $4.15 per share to $4.15- $4.25 per share.
• Tiffany's expects sales to increase in the high single digits.
• In the conference call, management said they expect marketing expenses to be higher a year-over-year basis over the next three quarters.

Analysts Eager to Comment on Solid Results

• Jefferies analyst Randal J. Konik reiterated a Hold rating on Tiffany & Co. and raised the price target from $84.00 to $90.00. The analyst remarked on the company's raised guidance writing, “Looking ahead the outlook is better than peers, as the company is benefiting from a strong luxury cycle and global diversification. The story here remains strong, however we remain on the sidelines given valuation.”
• Liz Dunn from Macquarie Research emphasized the long-term inflationary trend of precious metals contributing to Tiffany's model. Dunn reported the pricing increases were beneficial for the first quarter, but remains cautious on near-term valuation as “the stock is relatively expensive.”
• Topeka's Dorothy Lakner was more optimistic on shares following an “Enchanting Quarter”. The analyst was impressed with the company's better than expected GM. Lakner added that management's increase in guidance is still “conservative”. Topeka raised estimates and the price target from $110.00 to $115.00 on Buy rated Tiffany.
• Robert Drbul from Nomura reiterated a Buy rating and raised the price target from $100.00 to $110.00. The analyst sees strength in Tiffany's sales and in the company's capacity to drive leverage. Drbul wrote, “The company reported growth across all categories, with continued strength in Statement, Fine, and Solitaire jewelry at mid-higher price points. We expect a 7% constant-currency comp increase for 2014 including 7% in the US, 3% in Europe, and 10% in APAC.”

Stock Action

Shares of Tiffany closed at $96.30 on Wednesday. In Thursday's trading, shares reached a new 52-week high of $97.50.