Fossil Group Inc (NASDAQ: FOSL) shares were sinking Thursday, one day after the watchmaker reported a fourth-quarter earnings miss and weak first-quarter sales guidance.
Fossil guided to Q1 sales falling 16-22 percent year-over-year and a loss of $18 to $30 million.
Wells Fargo analyst Ike Boruchow maintained an Underperform rating on Fossil with an $8 price target.
Fossil, one of the worst-performing stocks in 2017, staged a comeback in 2018, when it was the best-performing stock in the S&P 500 — but it appears the bear case will be reignited, Boruchow said in a Wednesday note.
“FOSL’s 2019 outlook came in well below expectations, with Q1 top-line planned to fall at the largest rate in company history; however with a 2H outlook that embeds meaningful optimism."
The traditional watch business is undergoing a secular decline, and the smartwatch threat is real, the analyst said.
The problem for Fossil is that its wearables category has failed to make a meaningful impact on the business; taking on the Apple Inc. (NASDAQ: AAPL) Watch is a tough task for the company.
“Importantly, FOSL’s push into the smartwatch category has been disappointing over the past two years. More recently, the category inflected negatively in 4Q18,” Boruchow said.
Given that secular pressure on traditional watches is far from subsiding, the falloff in wearables truly hurts any real bull case that was previously made for the stock, according to Wells Fargo.
Fossil Group shares were down 11.22 percent at $14 at the time of publication Thursday.
Google Buys Smartwatch Tech And Know-How From Fossil
Apple Watches Could Be Covered by Insurance, In Boost To Wearables Sector
Photo courtesy of Fossil Group.
Latest Ratings for FOSL
View More Analyst Ratings for FOSL
View the Latest Analyst Ratings
See more from Benzinga
- 6 Stocks Moving In Wednesday's After-Hours Session
- The Year In Retail: Struggling Department Stores, A Smartwatch Success And Predictions
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.