Nomura Securities Defends Coach (COH): A Victim of High Expectations.

April 25, 2012 11:02 AM EDT Send to a Friend
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Price: $34.38 +0.32%

Rating Summary:
    7 Buy, 23 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 29 | Down: 45 | New: 4
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Nomura Securities maintains a 'Buy' on Coach (NYSE: COH) price target of $74.00.

Analyst, Paul Lejuez, said, "Although the market seemed disappointed by the deceleration in comps in 3Q, overall it was a strong qtr with better-than-expected GM and 24% EPS growth. We believe the 3Q comp would have been higher had the company not chosen to reduce factory promos. The change in factory pricing strategy (rolled out in late Jan) seems to make sense, but it will be important to watch over the coming qtrs, as it is difficult to change consumer behavior. COH continues to have impressive growth prospects and the best ROIC in retail, in our view. Our target price represents ~19x our calendarized F12E EPS ($3.83), a slight premium to its luxury peers, though justified given COH’s far superior ROIC (nearly double some of these peers). We are raising our F13E from $4.10 to $4.12 based on slightly higher GM."

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 $71.87 yesterday.


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