Movado Group: Minimal Impact from Dubai Sales Irregularities and Strategic Cost Reductions Highlight Potential Value Opportunity

Movado Group (MOV – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Hamed Khorsand from BWS Financial maintained a Buy rating on the stock and has a $31.50 price target.

Hamed Khorsand’s rating is based on a combination of factors that highlight the potential for Movado Group’s stock to appreciate. Despite recent sales irregularities in its Dubai operations, which led to a restatement of sales figures for the past three years, the impact was minimal, affecting just over 1% of total sales. The company has taken corrective actions by filing an updated 10K and terminating those responsible for the discrepancies.
Additionally, Movado Group’s fiscal fourth-quarter sales closely aligned with forecasts, with wholesale sales surpassing expectations. The company has also made significant investments in brand building, spending $17 million more on marketing last year, which it plans to reduce in the current fiscal year. This reduction in marketing expenses is expected to contribute to an estimated earnings per share of $2.57, while the stock trades at approximately $4 above its cash balance, indicating a potential value opportunity.