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Goldman Upgrades Tiffany; Raises Price Target

Goldman Sachs upgraded its rating of Tiffany & Co. to "neutral" from "sell," citing a rebound in the Japanese market and the retailer's success in passing along higher commodity prices to consumers.

Tiffany Gift Box
Photo By: minxlj
Tiffany Gift Box

The luxury goods seller had been on Goldman Sachs' sell list since Sept. 23, 2010, according to a report released on Thursday. During the past 12 months, the company's stock rose 72.9 percent—outperforming the S&P 500's 12.5 percent increase during the same time period.

The investment bank said its negative view on Tiffany failed to materialize due to three factors:

  • Tiffany has been helped by a faster-than-expected Japanese recovery. Japan's jewelry category in department stores has seen recovery after the country's March earthquake.
  • The luxury brand has successfully been able to pass higher commodity costs, including diamonds, gold, platinum and silver, to consumers.
  • The investment bank had expected Tiffany's valuation gap relative to department stores to narrow, but this prediction did not materialize. Rather, "the market has driven a wider valuation wedge between global luxury brands and domestic, low-growth department stores," according to the report.

In the report, Goldman also raised its 12-month price target for Tiffany to $77 from $68.

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Goldman Sachs does and seeks to do business with companies covered in its research reports.

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