Movado Group: Keeping Good Time
Movado Group appeals to shoppers' taste for high-end watches -- and the luxury lifestyle those timepieces represent. The company is expected to generate double-digit percentage sales growth this year, benefiting from the willingness of consumers to pay up for luxury goods -- such as watches priced in the thousands of dollars. But investors don't have to pay through the nose to invest in Movado. In fact, Standard Poor's analyst Jason Asaeda says the stock looks like a bargain.
The Paramus, N.J., company is well positioned in the global luxury goods market. Its brands cover a wide price range, from the ultra-expensive Ebel and Concord names to its entry-level Swiss brand, ESQ. Movado plans to spend heavily on new products and marketing this year. And it aims to build on the reputation of the Movado brand through its namesake boutiques, which sell jewelry as well as watches.
In addition to the brands the company owns outright, Movado has licensing partnerships to sell watches under various premium, high-growth fashion brands, including Coach, Tommy Hilfiger and Hugo Boss. It's planning to launch a new collection of Hugo Boss watches in March, and it's developing a high-end Juicy Couture collection.
The company is also expanding in foreign markets, such as China, Japan and Europe. SP says that continued expansion in selected markets should offer some protection should spending weaken among U.S. consumers.
Only a handful of brokerage analysts cover the stock (symbol MOV). SP gives Movado its highest, five-star ranking and added the stock to its "top ten" portfolio on Wednesday. The share price, which has more than doubled since January 2003, jumped 5% on Wednesday, to $21. At that price, the stock sells for 15 times SP's earnings estimate of $1.43 per share for the fiscal year that ends January 2007. SP's 12-month price target is $24.