Analyst downgrades Tiffany & Co. and cuts price target

Luxury jewelry retailer Tiffany & Co. has seen its shares downgraded to sell from hold while the price target for its shares have been cut to $52 from $58 by an analyst who said the firm's fundamentals are out of line with its stock price.

Analyst Laura Champine of Canaccord Genuity wrote in a note to clients that Tiffany's share price has seen a sharp rise since the start of the year even though holiday season 2012 sales were only modest.

The $52 price target is more than 25 percent below its closing price on Friday of just over $70. The share started 2013 at around $59.

Champine said Tiffany & Co. had not met earnings expectations for four straight quarters. She also wrote that U.S. sales, including purchases of luxury items, will continue to slow down as a result of recent tax hikes. The extra taxes will cut sales among "aspirational luxury consumers".

Meanwhile, another company, Sterne Agee, started its coverage of Tiffany with a neutral rating and a price target of $68.

Although macro-economic pressures are "currently impacting top-line results (at the same time margins are peaking and compares get tough), we still feel that the group is set up favorably from here", Sterne Agee said.

It noted that this was the best time of the year to own stocks in retailers since March-April are the "best months historically".

Any "near-term weakness "could possibly be broken as consumers receive refund checks and the weather potentially turns warmer which could boost "pent-up demand”.

In January, Tiffany posted a rise in global sales for the November-December holiday season of just 4 percent to $992 million.