Signet Stock Hits 52-Week High: Why This Analyst Says Shares Could Reach $140

A leading jewelry retailer is seeing shares trade higher Monday on a new analyst initiation and bullish call.

The Signet Analyst: UBS analyst Mauricio Serna initiated coverage on Signet Jewelers SIG with a Buy rating and $140 price target.

Related Link: Signet Jewelers Stock Gains On Q2 Beat, Raised FY22 Outlook

The Analyst Takeaways: With a 6.5% market share in the highly fragmented jewelry market, Signet is the leader worldwide. Serna pointed out the company’s transformational changes made over the last three-and-a-half years.

“The company now has a unique omnichannel offering (eCommerce + stores), stronger pricing power, a more efficient store footprint and fortress balance sheet,” Serna said.

The analyst points to the company previously having ineffective pricing, a high leverage to store performance and bad debt. 

Serna doesn’t believe the market is pricing in the turnaround the company has made, he said. 

“This valuation suggests the market still sees the old Signet and expects CY21 margin gains will revert in a tougher CY22.”

The analyst said Signet could continue to produce above-industry revenue growth over the next four years.

Serna highlights the jewelry industry could be ripe for continuing to transition to an omnichannel model, which could benefit Signet. The jewelry store count has fallen 21% worldwide from a peak in 2013, according to UBS research.

A $140 price target is based on a multiple of 12x for fiscal year earnings per share of $11.70. Signet’s peers trade at a 10.5x multiple but have lower EPS growth, according to the analyst.

SIG Price Action: SIG shares are up 7.75% to $96.05 Monday afternoon and reached new 52-week highs in the session.