Why Tiffany Might Regain Its Luster

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Tiffany  climbed 3% today after Sterne Agee upgraded the jewelry retailer from neutral to buy.

So what: Along with the upgrade, analyst Ike Boruchow reaffirmed his price target of $86, representing about 16% worth of upside to yesterday's close. While the stock has pulled back recently on valuation concerns, Boruchow believes it provides a solid buy-in opportunity given Tiffany's improving fundamentals.

Now what: Sterne Agee sees plenty of ways to win from the stock's current levels. "The company has a highly visible margin recapture opportunity over the next 18-24 months, a rapidly growing international platform (50% of sales comping HSD) and a US business that, while lagging the past 18 months, has recently made a number of key hires and implemented several new product initiatives that should lead to improving performance over the medium-term," noted Sterne Agee. Of course, with the stock still up about 30% from its 52-week lows and trading at a 20-plus P/E, I'd wait for an even wider margin of safety before banking on those tailwinds. 

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The article Why Tiffany Might Regain Its Luster originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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