Shares of Signet Jewelers jumped more than 3% in early trade on Tuesday after the world’s largest retailer of diamond jewelry announced the acquisition of Rocksbox, an innovative jewelry rental subscription platform. The financial terms of the deal were not disclosed.
The acquisition, which was driven by Signet’s (SIG) “Inspiring Brilliance” strategy, is likely to fuel growth in the services category and online services. Furthermore, the company expects Rocksbox to attract self-purchasing women customers, a demographic where Signet is currently under-developed, and expand the company’s market share.
Signet is focused on developing its services business, which forms part of the company’s Inspiring Brilliance growth strategy. Services including repair, warranty services, and piercings are set to expand, along with the introduction of new services.
Therefore, with the jewelry rental subscription, Signet expects a huge customer base as well as a new revenue stream. (See Signet stock analysis on TipRanks)
Signet CEO Virginia C. Drosos said, “Under CEO Meaghan Rose’s leadership, Rocksbox has revolutionized the jewelry rental subscription marketplace by delivering personalized, online and data-driven customer experiences for jewelry lovers who prioritize fashion, online convenience and sustainability. We look forward to bringing Rocksbox’s outstanding services to more customers, and to introducing those new customers to the balance of Signet’s banners.”
On March 19, Wells Fargo analyst Ike Boruchow lifted the stock’s price target to $50 (18% downside potential) from $34 and maintained a Sell rating.
Boruchow said, “Trends are improving, but 2H will begin the reversion to the mean. We do credit SIG for an impressive 4Q print. However, we see the rate of change story breaking down in the next few months, which will likely put pressure on valuation.”
The rest of the Street is sidelined on the stock with a Hold consensus rating based on 1 Buy, 2 Holds, and 2 Sells. The average analyst price target of $50.40 implies 16.9% downside potential to current levels. Shares have skyrocketed 113.3% so far this year.
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Signet is currently Neutral, as 4 hedge funds decreased their cumulative holdings of the stock by 907,600 shares in the last quarter.
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