Jefferies Upgrades Coach (COH) to Buy; Turnaround Taking Hold

Jefferies upgraded Coach (NYSE: COH) from Hold to Buy with a price target of $50 (from $35) and added the stock to the Jefferies Franchise Picks List. The analyst said the Coach turnaround is taking hold.

Analyst Randal J. Konik commented, "We are upgrading COH shares to Buy from Hold based on visible green shoots in the business which gives us confidence that transformation initiatives are taking hold & fundamentals are bottoming. Survey results show COH is starting to attract more new customers at a faster rate than any churn to the legacy customer base. Plus, we expect COH's remodel initiative to help fuel the return to positive comps, driving cost leverage & margin re-expansion; we estimate North American remodels alone should contribute ~$0.20-$0.50 in EPS over the next 3-5 years. Overall, our conviction in the turnaround is reflected in our above cons. estimates for FY'17 and FY'18. We also believe multiples will reexpand beyond current levels as investors gain confidence that repositioning initiatives are working & the industry remains healthy. Based on these factors, we are raising our PT to $50 from $35"

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 $32.02 yesterday.

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