Tiffany and Zale get good grades from analysts

Shares of jewelers Tiffany & Co. and Zale Corp. rose on Wednesday after getting a boost from investment banks raising ratings or target prices.

Tiffany shares closed up 98 cents, or 3.2%, to $31.38 Wednesday after UBS Warburg, which has a “strong buy” recommendation on the upscale jeweler, raised its 12-month price target to $39 from $35. The stock is now trading on the New York Stock Exchange at its highest levels since late August, Reuters reported.

“Often the best time to buy stocks is when the news is bleakest. That has proven to be especially true in Tiffany’s case over the years,” said UBS Warburg analyst Aram Rubinson in a report.

He also pointed to a recent recovery in gauges of consumer confidence, particularly among the top 20% income group, Tiffany’s target demographic.

Meanwhile, Dallas-based Zale’s stock closed up 78 cents, or nearly 2%, at $40.75, after Goldman Sachs raised its investment rating to “market outperform” from “market perform,” and increased its earnings estimates for the company.

The stock, which is also traded on the NYSE, has been hovering around $40 since Friday, its highest prices since August 2000.

Goldman Sachs analyst Adrianne Shapira upgraded Zale, saying the company’s turnaround from losses in the first quarter should unfold ahead of schedule.

Zale has been rebuilding under Chief Executive Robert Di Nicola, attempting to refocus on its main business of wedding and engagement rings and improve the quality of its inventory.

“The company has successfully addressed some of its internal problems, gotten their inventories back in shape, restored more of a quality image both through their advertising and improved the quality of their inventory,” Lynn Detrick, an analyst with Sanders Morris Harris, told Reuters.

Analysts said that, besides the upgrades, both shares’ upward movement could be attributed to signs that jewelry sales are stronger than forecast and on expectations of a pickup next year, Reuters reported.

“Part of the lift in the jewelry stocks has been that last week’s International Council of Shopping Centers data showed a bit of a turnaround in the jewelry sector,” Maura Byrne, a retail analyst at Salomon Smith Barney told Reuters. “I think that provided a lift to the jewelry retail stocks.”

The poor years experienced by both companies will make for favorable comparisons, Rubinson ttold Reuters. “This was a pretty atrocious year for both companies and, at least chronologically, Christmas is behind us. So all that matters now is the future instead of the past-let’s look forward to an easier comparison rather than dwelling on weak fundamentals,” he said.