Barrons Still Sees 17% Upside in Shares of Coach (COH)
Barrons issued a bullish piece on Coach (NYSE: COH) over the weekend. The publication argues the stock could hit $80 per share within the next year.
Barrons pointed out shares of Coach currently trade (19.77 times the Street’s consensus for the fiscal year) at somewhat of a discount compared to Ralph Lauren’s (NYSE: RL) five-year average of 21 times. Shares of Coach are trading up 12.17 percent year to date.
The company’s second-quarter results indicate double digit sales growth in North America as earnings rose by 18 percent year over year. Barrons believes sales may increase by 15 percent to $4.78 billion in fiscal 2012.
The company’s better-than-expected second-quarter gross margin of 72.2 percent suggests the strong demand for its products and the company’s ability to avoid major promotion adds to drive sales. Many retailers during the holiday season used large promotional ads to drive sales growth.
Barrons believes growing demand for Coach’s men segment and the company’s expansion in China will continue to drive strong growth ahead. Management predicts China sales will be roughly $300 million for fiscal 2012. The company’s men segment should generate around $400 million in fiscal 2012 and rise to $1 billion within the next three to five years.
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Barrons pointed out shares of Coach currently trade (19.77 times the Street’s consensus for the fiscal year) at somewhat of a discount compared to Ralph Lauren’s (NYSE: RL) five-year average of 21 times. Shares of Coach are trading up 12.17 percent year to date.
The company’s second-quarter results indicate double digit sales growth in North America as earnings rose by 18 percent year over year. Barrons believes sales may increase by 15 percent to $4.78 billion in fiscal 2012.
The company’s better-than-expected second-quarter gross margin of 72.2 percent suggests the strong demand for its products and the company’s ability to avoid major promotion adds to drive sales. Many retailers during the holiday season used large promotional ads to drive sales growth.
Barrons believes growing demand for Coach’s men segment and the company’s expansion in China will continue to drive strong growth ahead. Management predicts China sales will be roughly $300 million for fiscal 2012. The company’s men segment should generate around $400 million in fiscal 2012 and rise to $1 billion within the next three to five years.
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