Ahead of the Bell: Tiffany

JPMorgan analyst Brian J. Tunick, who rates the stock "Neutral," recently met with Mark Aaron, the company's vice president of investor relations.

Tunick said Tiffany has gained traction in Europe, and the company anticipates it can double its European store base over the next five years.

In the Asia-Pacific region, excluding Japan, Tiffany continues to boost its brand. The company believes it can grow its base of eight stores in China to between 25 and 30 stores over the next five years, Tunick said.

Over the past three years, Tiffany's international operating margins were higher than in the U.S. "As international grows as a percent of sales, that should further support margins," Tunick wrote in a client note.

However, Tunick warned of continued weakness in the U.S. and that Tiffany doesn't materially change its strategy during economic downturns.

"We think U.S. (same-store sales) could remain negative in the fourth quarter when Tiffany typically generates half of annual earnings per share, below guidance for positive comps," Tunick wrote in a client note.

Same-store sales, or sales at stores open at least a year, is an important retail performance indicator because it measures sales at existing stores rather than newly opened ones.