Maxim Group initiates coverage on Fossil Group with Buy rating, PT $5.

Maxim Group initiates coverage on Fossil Group with Buy rating, PT $5.

Maxim Group, a leading investment research firm, has initiated coverage on Fossil Group (NASDAQ: FOSL) with a Buy rating and a price target of $5.00. The move comes following significant changes within the global watch company, which has implemented a multi-year recovery plan under new leadership [1].

Fossil Group, currently valued at $79.4 million, has shown volatility with an 11.3% gain in the past week. The company's turnaround strategy focuses on three key pillars: refocusing on core analog watches, cutting $100 million in SG&A expenses, and strengthening its balance sheet [1]. Maxim Group expects Fossil's sales to reach their lowest point in 2026 before returning to growth in 2027, with projected sales of $800 million, mid-to-high single-digit operating margins, and positive free cash flow [1].

As of March 31, 2025, Fossil Group reported $78.3 million in cash and $179.5 million in debt, including $150 million in senior notes due in November 2026. Maxim Group noted that a capital raise will likely be necessary to address the maturing debt [1]. The $5 price target represents an enterprise value-to-sales multiple of 0.5x, in line with Fossil’s peers, compared to its current trading multiple of 0.2x based on 2026 estimates [1].

Fossil Group's first-quarter 2025 earnings revealed a decline in net sales to $239 million, a 6% decrease in constant currency, and a negative earnings per share (EPS) of -$0.33. Despite these challenges, the company expanded its gross margin by 880 basis points to 61.1% and improved its adjusted operating income from a loss of $20 million to a profit of $10 million [1]. Fossil Group plans to close 50 additional stores in 2025 as part of its strategic initiatives [1].

Maxim Group is currently the only sell-side firm covering the stock, according to LSEG data. The firm highlighted Fossil’s portfolio of owned and licensed brands, including Diesel, Michael Kors, and Armani Exchange, which contribute to its competitive edge [1]. Analysts have shown interest in Fossil’s strategies for mitigating tariff impacts and the company's confidence in its supply chain’s flexibility [1].

References:
[1] https://www.investing.com/news/analyst-ratings/maxim-group-initiates-fossil-stock-with-buy-rating-on-turnaround-potential-93CH-4119383
[2] https://www.marketbeat.com/instant-alerts/fossil-group-nasdaqfosl-coverage-initiated-at-maxim-group-2025-07-01/