Tiffany & Co. (TIF) — The high-end jewelry designer and retailer reported weak quarterly results last week, hurt by strength in the U.S. dollar. Earnings of 70 cents per share fell 4 cents short of the consensus estimate, and the company reported revenue of $938.2 million versus an estimate of $972 million. Comparable-store sales in the Americas, which account for more than 50% of revenue, fell 6%, impacted by lower tourist sales.
Following the report, S&P Capital IQ Equity Research, which has a “hold” rating on TIF stock, lowered its 12-month price target by $5 to $87. But this is based on an above-average P/E of 20 times its analysts’ fiscal year 2017 EPS estimate of $4.35.
TIF stock made a high at about $110 a year ago. Since then, it has plateaued in a series of flatline consolidations while maintaining a long-term downtrend.
Note the June-to-August rectangle that broke down through its 50-day and 200-day moving averages in mid-August at about $93. TIF stock appears to be consolidating in a similar pattern now with support at $74 and resistance at about $84.
Technically there are several positives that could boost shares to the top of the rectangle, where they would make a good short sale candidate:
- A double buy signal from my proprietary indicator, the Collins-Bollinger Reversal (CBR), at $78;
- A short-term MACD buy signal; and
- Recent high-volume buying.
Sell TIF stock short at $84 with a downside target of $74 for a potential profit of 12% by year end.
