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Bet on Tiffany because the rich are getting richer from the rising stock market, Goldman says

    • Goldman Sachs has initiated a buy rating, up from neutral, on shares of Tiffany & Co.
    • The firm also raised its price target to $107 per share.
    • Tiffany shares closed Thursday at $92.02, so this implies an upside of more than 16 percent.
    A model shows off a diamond ring and bracelet as she stands outside the entrance of a Tiffany & Co. store.
    Timothy A. Clary | AFP | Getty Images
    A model shows off a diamond ring and bracelet as she stands outside the entrance of a Tiffany & Co. store.

    Tiffany & Co. just got a nice upgrade from Goldman Sachs.

    The bottom line is that rising stocks are causing the wealthy to get wealthier, and in turn they will buy more jewelry, according to Goldman's Lindsay Drucker Mann.

    Goldman has initiated a buy rating, up from neutral, on the shares, with a higher price target of $107. Tiffany shares closed Thursday at $92.02, so this implies an upside of more than 16 percent.

    High-end consumer confidence, for example, has been rising since the election, Goldman noted. Wealthier consumers are more upbeat about the U.S. economy than low-income individuals, the firm said, citing data from a survey of 2,000 consumers.

    "This improvement is attributed to re-accelerating growth in consumer net worth driven by higher equity market values, with the benefits accruing disproportionately to higher-income consumers," the analyst wrote in a Friday note to clients.

    As of Thursday's close, shares of the luxury jewelry retailer have climbed nearly 39 percent over the past 12 months and are up about 19 percent for the year-to-date period. The S&P 500 is up 7 percent this year and 16 percent over the last 12 months.

    Tourists are also giving Tiffany and many of its luxury retail peers a boost, the note said.

    "International tourism businesses have improved for ... luxury retailers and brands on easy comparisons," analyst Mann wrote, pointing out that many global luxury brands — such as Prada and Burberry — have reported stronger sales results already for the first quarter, and those numbers have been "encouraging."

    TIF 12-month performance

    Source: FactSet