Credit Suisse Upgrades Coach (COH) to Outperform; Favorable Risk/Reward

Credit Suisse upgraded Coach (NYSE: COH) from Neutral to Outperform with a price target of $47.00 (from $42.00), saying brand stabilization with possible acquisition story offers favorable risk/reward.

Analyst C. Buss commented, "We are upgrading COH shares to Outperform from Neutral as we believe stabilization in Coach's core business combined with a possible acquisition narrative could help drive significant, sustained earnings power long-term. Our baseline model reflects comp stabilization followed by conservative comp growth expectations in the LSD range with double-digit EPS growth over the next 5 years, providing 9% potential upside to current share price. We also look at reasonable bull/bear scenarios which suggest 35%-plus upside and 19% downside risk to shares. We believe COH is the best positioned company in the "Affordable Luxury" accessory group and view this more favorable risk/reward scenario as a compelling reason to put money to work. As a result, we upgrade shares, raise estimates and our Target price to $47 from $42."

The firm believes Coach could become an American luxury brand house through acquisitions. Compelling targets could include names such as Furla, Longchamp, Tod's, Jimmy Choo, and Manolo Blahnik.

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 $43.13 yesterday.

You May Also Be Interested In

• UBS Upgrades Apollo Tyres (APTY:IN) to Buy
• Bernstein SocGen on Meta Platforms Inc. (META): 'Risk-reward remains attractive'
• Viking Holdings (VIK) PT Raised to $82 at Mizuho