NEW YORK (AP) — An analyst raised his rating for Fossil Inc. on Monday, saying in part that the watch maker's stock price now provides a good entry point for investors.
Eric Beder of Brean Murray Carret & Co. said in a client note that Fossil's share price is off about 30 percent from early November, before it announced it third-quarter earnings results. The stock closed at $78.46 on Friday and was at $99.30 on Nov. 1, 2011.
Beder said the declining stock price reflected investors' disappointment by the company's conservative outlook for the rest of the year. Fossil said on Nov. 8 that it was cutting its fourth-quarter guidance because of the stronger U.S. dollar and its shares, but it raised its full-year forecast.
The analyst also said that he is starting to see price hikes this year.
"We note last year gross margins were affected by rising costs and an inability to raise prices on models already in the pipeline. We do not believe inability to raise pricing will be a margin issue in 2012," Beder wrote.
Aside from watches, Fossil makes handbags and accessories. Beder says that he thinks Fossil will confirm that its watch business is still very strong when it speaks at the ICR XChange conference, which is being held Tuesday through Thursday in Miami. The analyst said watches were likely still popular gifts during the holidays, particular Michael Kors watches, and that Fossil was able to charge full prices during the holiday season. Handbags also continue to be on pace for strong growth, he added.
Beder boosted Fossil's rating to "Buy" from "Hold" and initiated a $100 price target.
A representative from Fossil, which is based in Richardson, Texas, could not be immediately reached for comment.