Analyst says Fossil likely to beat 1Q expectations

PiperJaffray analyst Neely J.N. Tamminga said since Fossil offered first-quarter guidance for a profit of 39 cents per share on Feb. 19, the dollar has depreciated by 6 percent versus the Euro and 2 percent versus the British Pound.

"Similar to what we monitored in the previous quarters, when the U.S. dollar weakens relative to these two key currencies, gross margin rates have bested expectations," Tamminga wrote in a research note on Monday. "As such, we are comfortable that the company will be able to best our 39 cents per share and the Street's 40 cents per share estimate."

Tamminga added that Fossil's retail division, which is 16 percent of sales, is likely to be weak, but improving since the fourth quarter.

"Although we believe Fossil will likely fall short of our 'flat' estimate, we believe solid international sales growth will likely offset this weakness," Tamminga wrote.

Fossil is slated to report earnings on Tuesday.

Shares rose $1.32, or 3.7 percent, to $36.69 during afternoon trading. The stock has traded between $24.81 and $46.25 during the past 52 weeks.