(Bloomberg) -- Everything was fun and games until the trade war came up.
Tile Shop Holdings Inc. briefly rose as much as 8.4 percent after reporting earnings that beat estimates this morning. About twenty minutes later, shares dropped as much as 5.4 percent. In about an hour, they were up again. Then down. And so on.
Telsey Advisory Group analyst Joe Feldman explained the roller-coaster movement. “There was some initial enthusiasm” after the company reported better-than-expected sales and in-line earnings for the third quarter, he said in a phone interview.
Then, on the conference call, there was some talk of tariffs and potential lower returns, which may have driven the sharp pivot downward, Feldman said. He rates the Minneapolis firm at the equivalent of a sell and has the lowest price target on the Street, $5.50, or 14 percent below Thursday's close.
Shares of Tile Shop were well above $7 for most of the earnings call. But soon after CFO Kirk Geadelmann mentioned tariffs, the stock began to slip. About $15 million disappeared from the market value of TTS after a close near its session low.
There are two camps, according to CJS Securities' Dan Moore: Those who believe in TTS's “self-help story” and those with “macro fears about things TTS can't control.”
“We think they'll be able to work through the tariffs,” said Moore, who rates Tile Shop market outperform, and a Street-high $10 price target.
Following the stock's initial rebound, Feldman said, “you may have some analysts and investors defending the stock on the expected benefits from improving the product assortment and stores.”
To contact the reporter on this story: Natalie Pertsovsky in New York at npertsovsky@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Jeremy R. Cooke
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