TIF: Luxury Trade Is Back, No Really!

Luxury rebounds!

How many times have we heard that, only to have it yanked away?

Well, Caris & Co. analyst Dorothy Lakner this morning wants you to know that the luxury trade definitely is back. She expects “good news” when Tiffany & Co. (TIF) reports its Q4 on March 22, and a favorable outlook on Q1.

Tiffany shares today are down 24 cents, or half a percent, at $47.34.

The company probably had better-than-expected sales over the holidays in all regions of operations, and there are numerous things working in the stock’s favor this year: value-priced (read: cheap) jewelry; being above the “retail fray,” as she puts it; industry consolidation (read: Zale (ZLC) is on the ropes); and new, smaller stores in the U.S. that could lead to expansion.

Lakner maintained her “Buy” rating and price target of $57, a multiple of 23 times her 2010 earnings per share estimate of $2.50, which is unchanged. The Street has been modeling $2.43 this year.

Riddle me this: Is the luxury trade back if Tiffany is selling cheap jewelry to the masses and opening small stores?

Those of you who doubt, read MarketBeat’s note this morning on increased TIF short-selling, which picks up themes discussed by my colleague Steven Sears’s in an article yesterday on Goldman Sachs betting against the stock in the options market.

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