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Earnings Release: Here's Why Analysts Cut Their Fossil Group, Inc. Price Target To US$5.50

Simply Wall St

One of the biggest stories of last week was how Fossil Group, Inc. (NASDAQ:FOSL) shares plunged 29% in the week since its latest yearly results, closing yesterday at US$4.28. The result was fairly weak overall, with revenues of US$2.2b being 2.5% less than what analysts had been modelling. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Fossil Group

NasdaqGS:FOSL Past and Future Earnings, February 28th 2020
NasdaqGS:FOSL Past and Future Earnings, February 28th 2020

Following the recent earnings report, the consensus fromdual analysts covering Fossil Group expects revenues of US$2.04b in 2020, implying a discernible 7.9% decline in sales compared to the last 12 months. Prior to the latest earnings, analysts were forecasting revenues of US$2.20b in 2020, and did not provide an EPS estimate. It looks like analysts have become a bit less bullish on Fossil Group, given the revenue estimates after the latest results.

The average analyst price target fell 27% to US$5.50, with analysts clearly having become less optimistic about Fossil Group's prospects following its latest earnings.

It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Fossil Group's past performance and to peers in the same market. Over the past five years, revenues have declined around 8.5% annually. On the bright side, analysts expect the decline to level off somewhat, with the forecast for a 7.9% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 7.1% per year. So while it's not great to see that analysts are expecting a decline, at least Fossil Group is forecast to shrink at a slower rate than the wider market.

The Bottom Line

Probably the biggest thing to take away from these latest forecasts is that brokers are definitely optimistic on the business, given the forecast for profitability next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

We have estimates for Fossil Group from its dual analysts , and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.