Analyst starts Fossil coverage with 'Buy' rating

Analyst initiates coverage of Fossil with 'Buy' rating, says company is more than just watches

• On 10:43 am EDT, Wednesday September 2, 2009

NEW YORK (AP) -- Fossil Inc. is more than just a watch company, an analyst said Wednesday as he initiated coverage with a "Buy" rating.

Randal Konik of Jefferies & Co. says the Richardson, Texas-based company has branched out into licensing and non-watch products, which include shoes and accessories, that will allow it to grow the business in the future.

"Today the Fossil brand accounts for greater than 50 percent of sales and the watch category 67 percent of total. This is down significantly from only 10 years ago when Fossil watches was the entire business," he wrote in a client note.

Fossil has also been able to successfully grow its business overseas, with U.S. sales making up less than 50 percent of total revenue, Konik explained.

"The business model is well diversified with distribution across multiple channels around the world," he added.

Konik gave Fossil a $32 price target.

The company's stock added 25 cents to $25.35 in morning trading, after gaining 50 percent in the year to date.