Fossil Stock Could hit $25, Analysts Say

Fossil Group Inc

Fossil Group Inc (NASDAQ:FOSL) stock skyrocketed after the company topped revenue and earnings estimates for the fourth quarter. Additionally, its move to become an e-commerce/wearable-tech brand enhanced investor’s confidence in its future fundamentals.

Fossil share price rose almost 67% in early trading on Tuesday; shares briefly hit $17 before retreating to $14 a share.   

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Solid Q4 Results For Fossil Group Inc

Fossil revenue topped the consensus estimate by $31 million, while earnings exceeded analysts’ estimates by $0.27 per share.

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Additionally, the company has achieved several major milestones, aimed at accelerating its strategic objective of moving the revenue base to new channels. The company has been following four key strategic goals:

  •         Driving growth in wearable’s across its portfolio of powerful brands
  •         Leveraging its scale to lower supply chain costs
  •         Increasing its digital capabilities
  •         Continuing the transformation of its business through New World Fossil.

Its business strategies are working; wearable sales doubled to over $300 million in Q4, accounting for 14% of total watch sales. The sales for Michael Kors watches improved in the latest quarter, and Armani watches posted double-digit growth in sales.

Its CEO said, “We introduced a number of new hybrid and display smartwatches across 14 brands and believe the continuation of this effort, combined with the innovation we are introducing across our traditional styles, has us poised for stabilization and growth over time.”

On the other hand, Fossil management substantially expanded its digital presence – allowing the company to generate 31% Y/Y growth in e-commerce sales in the fourth quarter.

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The Stock is Set to hit $25, Analysts Say

KeyBanc has lifted FOSL stock price target to $25 from the earlier price target of $15. Several other analysts, including L&F Capital Management and DTF Capital, expect steady growth in FOSL share price.

Overall, investors are admiring the company’s strategy of reducing the cost structure, while moving its business model towards higher growth businesses. Fossil management lowered its expenses by $95 million last year; expecting to reduce operational costs by $200 million by the end of 2018

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