Ahead of the Bell: Tiffany Downgraded

A Banc of America analyst reduced her rating on Tiffany & Co. Tuesday, praising the company for significant gains in the past nine months, but saying "a number of catalysts have played out."

Dana E. Cohen cut Tiffany to "Neutral" from "Buy," but kept a $51 price target on the shares of the New York-based luxury retailer. The stock closed at $47.61 Monday, up 21 percent year to date, while retailing in general is down about 20 percent for the year, she noted.

Her "Buy" call on the shares, made in March, was pegged to the 5.45 percent stake in the company bought by Trian Fund Management LP, a hedge fund run by billionaire financier Nelson Peltz. Known as an activist investor, Cohen said at the time she expected Peltz to spur the company to improve its performance, which at the time lagged other luxury retailers.

"Since then, we think management has done a great job with a series of positive catalysts (watches, asset sales, operational improvements)," Cohen wrote in a note to clients Tuesday. "In addition, the stock is now trading at a premium to the other luxury names."

Cohen also cited concerns about a slowing of U.S. economic growth, and noted Tiffany moderated its forecasts for fourth-quarter sales growth in stores open at least a year, an important measure of retail strength.

"While we suspect there is a macro component, it is somewhat perplexing given the strength of the jewelry category generally and there may be a market share issue as well," the analyst said.

"Given a current valuation that likely builds in some of the positive catalysts that we have been discussing, along with some possible signs of slowing in the U.S. non-flagship stores, we are stepping aside at this point."