Why Tiffany Might Regain Its Luster

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Tiffany  (NYSE: TIF  ) climbed 3% today after Sterne Agee upgraded the jewelry retailer from neutral to buy.

So what: Along with the upgrade, analyst Ike Boruchow reaffirmed his price target of $86, representing about 16% worth of upside to yesterday's close. While the stock has pulled back recently on valuation concerns, Boruchow believes it provides a solid buy-in opportunity given Tiffany's improving fundamentals.

Now what: Sterne Agee sees plenty of ways to win from the stock's current levels. "The company has a highly visible margin recapture opportunity over the next 18-24 months, a rapidly growing international platform (50% of sales comping HSD) and a US business that, while lagging the past 18 months, has recently made a number of key hires and implemented several new product initiatives that should lead to improving performance over the medium-term," noted Sterne Agee. Of course, with the stock still up about 30% from its 52-week lows and trading at a 20-plus P/E, I'd wait for an even wider margin of safety before banking on those tailwinds. 

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