On Thursday, BWS Financial initiated coverage on Movado Group Inc . (NYSE:MOV) with a Buy rating and set a price target of $31.50. Currently trading at $20.24, Movado shows promising potential according to InvestingPro data, which indicates the stock is undervalued. The firm's analysts pointed to the company's strategic use of its cash reserves to boost marketing efforts as a key driver for future sales growth. Movado, known for its watches, has expanded its portfolio through licensing agreements to include watches and jewelry for other brands.
The luxury watchmaker has opted to invest heavily in brand promotion for the fiscal year of 2025, which ends in January. This increase in marketing spend has led to a temporary dip in earnings, according to BWS Financial. Despite this, the company maintains strong fundamentals with a current ratio of 4.27 and more cash than debt on its balance sheet. The analysts believe this situation will not persist beyond the current fiscal year.
Movado's strategy includes leveraging brand ambassadors to enhance consumer awareness, which is expected to translate into increased sales throughout the calendar year of 2025. Despite the short-term earnings decline, BWS Financial views the current lower stock price as an opportunity for investors.
The decline in earnings and the potential reduction of the cash dividend have led to Movado's stock trading at what BWS Financial considers a significant discount, resulting in the company being removed from the S&P 600 index.
The analysts see this as an attractive entry point for investors, suggesting confidence in Movado's ability to rebound from the current fiscal year's depressed earnings. The anticipated higher sales, driven by the company's marketing initiatives, are expected to improve Movado's financial performance in the near future.
In other recent news, Movado Group Inc. reported significant misses in its third-quarter earnings for fiscal year 2025. The company's earnings per share (EPS) of $0.37 fell short of the forecasted $0.80, and revenue also missed expectations, coming in at $182.7 million against a forecast of $209.1 million. Despite these challenges, Movado's international markets showed resilience, growing by 0.4%, with notable strength in India, where sales increased by 20%.
The company also announced a $50 million share repurchase program. According to CEO Efraim Grinberg and CFO Sally DeMarsales, the company plans to focus on improving profitability in fiscal 2026, supported by new product launches and the share repurchase program.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.