| Wednesday 31 October 2007 |
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Lukewarm response to new fragrances
Shares of Elizabeth Arden Inc. fell Tuesday after the company was downgraded to hold from buy by Wedbush Morgan Securities, which cited "lukewarm" responses to fragrances that are being launched for the holiday season. In a note to clients, Wedbush wrote that new celebrity fragrances being released by the company, including fragrances by Mariah Carey and Britney Spears, were selling poorly compared with past releases.
The firm noted that the new Britney Spears fragrance had placed out of the top 10 of sales, compared with her previous two fragrances, which debuted at first and third place. The decrease in popularity, the firm wrote, is "signaling that this family of celebrity fragrances, which we believe represents about 10% of total sales for RDEN, may have peaked".
The firm maintained its $25 price target and earnings estimate of $1.66 a share for 2008 but cautioned that Elizabeth Arden was "no longer trading at discount valuation" following recent price appreciation. "Though Elizabeth Arden should still see positive benefit from the impact of a weak dollar on its international business," the firm wrote, "we believe the lukewarm response to new fragrances this holiday season may temper such performance." (Trading Markets)
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