Broker Jefferies looks at watch and handbag maker Fossil (NASDAQ:FOSL) and says challenges remain after the firm smashed expectations with fourth quarter earnings on Tuesday.
It rates shares a 'hold' and targets US$40 a share - against a current price of around US$34.46.
While there were some positive highlights in the fourth quarter, the broker sees ongoing top-line pressure from a growing wearables market and weakness in the multi-brand licensed watch portfolio, particularly KORS.
Analyst Randal Konik says he believes the stock's valuation is full and it repeats a 'hold' stance.
"Overall, FOSL's traditional watch business continues to face a significant challenge as consumer demand continues to shift toward wearable technology options.
"At the same time, the company's regional diversification presents a near-term headwind given unfavorable exchange rates, while macro challenges in Asia do not show signs of easing," he says.
The same broker also looks at US focused oil and gas explorer and producer Cimarex Energy (NYSE:XEC) and rates the shares 'underperform' after it posted earnings on Tuesday.
The company reported earnings per share of US$0.25 for the quarter, missing analysts’ consensus estimates of US$0.12.
Amid lower crude prices, the oiler said it planned to spend $600-$650mln in E&D this year, compared to $877mln in 2015. Another $50mln will be used for infrastructure and other, bringing total capex to $650-$700mln.
Jefferies said: "We think the 23% reduction in capex is sensible in a 'return-free' environment."
However it added that the magnitude of the group's production decline, around 10% exit-to-exit, and around 7% year-on-year could startle growth investors expecting greater momentum from last year's capital raise.