(By Balachander) Brean Capital LLC downgraded rating on shares of Fossil Inc. (NASDAQ: FOSL) to "sell" from "hold" and instituted a price target of $85.
The brokerage believes the recent aggressive run up in the stock is unwarranted, especially in the near term, as it views China as slowing and Europe and the domestic markets remaining under pressure.
Brean Capital said near term material catalysts are clearly on the horizon.
"We want to emphasize that this call is very much risk/reward and shorter term predicated; we believe that, in the longer term, Fossil will remain a dominant timepiece brand," the brokerage wrote in a note.
The brokerage lowered 2012 EPS estimate to $5.34 from $5.40 and 2013 EPS to $5.81 from $6.00, resulting in both of its projections being below consensus.
Brean Capital said it now assumes less aggressive growth in Europe and the domestic markets, coupled with less aggressive margin expansion. The brokerage believes management will provide disappointing guidance when 4Q results and initial 2013 guidance is released before the open on February 12.
On Wednesday, shares of the fashion accessories designer retreated 2.52 percent to trade at $104.00. Over the past year, the stock has been trading between $62.77 and $139.20.