The worst is behind Tiffany & Co., an analyst said on Friday, expecting sales to improve as the economy rebounds and jewelry competitors close stores.
Oppenheimer analyst Brian Nagel started coverage of the luxury jeweler with an Outperform rating and price target of $38, implying shares could rise 23.5 percent over the next 12 months from Thursdays closing price of $30.78.
Nagel said tiffany jewellery is one of the best managed and most dominant brands among international retailers.
Although sales slowed over the past several quarters because of waning discretionary spending, revenue should improve once the economy does, he said.
Nagel said Wall Street underestimates Tiffanys earnings potential in a better economy.
Tiffany Jewelry is also well positioned to gain market share from the jewelers who were forced to close their doors during the recession.
We believe that market share gains could add as much as $1.30 to earnings per share at tiffany over time, Nagel wrote in a client note.
Shares rose $1.10, or 3.6 percent, to $31.88 in morning trading.
