NEW YORK (AP) -- Shares of Movado Group climbed more than 7 percent Friday as an analyst upgraded his rating and price target for the watch maker and said Movado's diversified business provides a good growth opportunity.
THE SPARK: Oliver Chen of Citi Investment Research boosted Movado to "Buy" from "Neutral" and raised its price target to $40 from $38.
THE ANALYSIS: Chen likes that Movado's wholesale business, which includes several licensed brands, make up about 42 percent of its revenue.
"Wholesale reduces Movado's exposure to volatile consumer spending habits and decreased margins from markdowns," he wrote in a client note.
The analyst also finds the company's international business appealing because it provides a diversified and less risky customer base.
While U.S. shoppers continue to be cautious with their spending, many international customers tend to remain loyal to luxury brands even during uncertain economic times.
Management has indicated that new products, such as the ceramic and steel Cerena and the Museum Sport Chronograph, are performing well. Aside from well-received new products, Movado is benefiting from more brand recognition overseas, Chen said, as it now has a wider price range for its goods and has expanded its marketing efforts.
SHARE ACTION: Movado Group Inc.'s stock gained $2.73, or 8 percent, to $36.73 in afternoon trading. The shares have traded in a 52-week range of $18.06 to $37.31.
