Instagram May Indicate Demand Building for Coach (COH) - Piper Jaffray

Piper Jaffray analyst, Erinn Murphy, partnered with a web analytics specialist to analyze Instagram data for retail trends. The analyst finds it notable that the level of engagement with Coach (NYSE: COH) on Instagram is greater than that of its peers and may indicate growing demand. No change to Overweight rating or $38 PT based on 17x FY17E EPS + Cash.

In partnership with a web analytic specialist, PiperJaffray describes how Coach has been fueling incremental engagement through Instagram. Instagram is touted as the No. 1 most important social network for teens. While the total number of Instagram followers for Coach (1.1M) still lags both Kate Spade (1.5M) and Michael Kors (6.9M), the level of incremental engagement, as measured in likes per photo outpaces its major peers.

In the December quarter, Coach generated a 60% increase in the number of "likes per post" vs. last year--this was above KATE at 30% increase and KORS at an 8% increase Y/Y. In addition, when looking at "comments per post", Coach today is seeing ~2.6x the level that it did back in mid-2013. By comparison, Michael Kors' comments per post are roughly flattish.

Michael Kors, Kate Spade, Coach, Tory Burch and Rebecca Minkoff have follower bases of: 6.9M, 1.5M, 1.1M, 1.1M, and 0.6M. With the explosive growth from Michael Kors, on a two-year CAGR, its Instagram follower base has grown at 110% clip. This in turn supported the company's revenue CAGR of ~24%. That said, of the five brands benchmarked, Coach saw the second quickest IG follower growth--with a two-year CAGR of 82%. This growth is particularly impressive, given the overall brand has lost sizable market share during this period and seen a two-year sales CAGR decline of ~5%.

For an analyst ratings summary and ratings history on Coach click here. For more ratings news on Coach click here.

Shares of Coach closed at $35.05 yesterday.

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