NEW YORK (AP) -- Shares of Harry Winston Diamond Corp. rose Wednesday after Citi analysts said the diamond company's stock "may be an investor's best friend."
THE SPARK: Analysts Oliver Chen and Kate McShane initiated coverage of Harry Winston's stock with a "Buy" rating and a $15 price target.
THE BIG PICTURE: Harry Winston sells high-end jewelry and watches at retail locations in New York, Paris, London, Beijing, Tokyo and other cities. The company also draws about 40 percent of its revenue through its 40 percent ownership stake in the Diavik diamond mine in Canada.
Harry Winston said in January that 6.7 million carats of diamonds were recovered from that mine in 2011, below the 6.9 million carats the company had forecasted.
THE ANALYSIS: Chen and McShane said the company's mix of retail and mining businesses makes it a special stock that gives investors more exposure to the diamond market.
Chen and McShane expect the company's bridal jewelry growth to increase, especially in Japan and China. They also believe that Harry Winston's new collection of watches, which are priced lower than its traditional watches, will attract new customers to the brand.
In addition, they noted that diamond prices have risen because of a shortfall in supply, along with rising demand in emerging markets and a market preference for high-end production. This means that the company's mining segment provides a strong base for the stock value.
SHARE ACTION: Harry Winston shares rose 83 cents, or 7 percent, to $12.76 in afternoon trading Wednesday. The stock is up 39 percent since hitting a 52-week low of $9.14 in October.
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