Evercore ISI Upgrades Tapestry Inc. (TPR) to Outperform, 'Coach Accelerating + CPRI De-Risked + Laggard P/E'

Evercore ISI analyst Michael Binetti upgraded Tapestry Inc. (NYSE: TPR) from In Line to Outperform with a price target of $50.00 (from $30.00).

The analyst commented: "Three Key Reasons for Our Upgrade to Outperform (Target Price to $50 from $30): We think TPR’s P/E has significantly lagged the recent peer group re-rating for 3 key reasons…all of which pose significantly less risk today: 1) Core Coach Brand Accelerating: Despite a declining US handbags category pressuring results in recent quarters, we think Coach N. America accelerated by enough in F2Q to raise TPR’s full year ’24 guide. Read-throughs suggest TPR’s China guidance is overly conservative. We raise our FY24E EPS to $4.19 from $4.14 (Street: $4.13), and FY25E EPS to $4.60 from $4.48 (Street: $4.48); 2) CPRI Brands Significantly Under-Invested: While we share market concerns about the health of CPRI’s brands, Consensus EBIT has already been cut -40% since CPRI first guided FY24; 3) Balance Sheet Concerns: While we initially bristled at TPR’s $8B of pro-forma debt, TPR should generate at least $1.5bn of pro forma FCF/year—even under very conservative assumptions (i.e., no synergies), which should lower the leverage ratio by 0.8-0.9x turns each year, and drive leverage sub-2.0x within 3 years. Potential for business synergies and an improving interest rate environment are further tailwinds."

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

Shares of Tapestry Inc. closed at $40.01 yesterday.

You May Also Be Interested In

• Tapestry Inc. (TPR) PT Raised to $185 at Bernstein SocGen Group
• Jefferies on Five Below (FIVE): 'Our latest channel checks reinforce our view that FIVE's momentum extends well beyond viral Squish trends'
• JD.com (JD) Reiterated at Buy by Benchmark Amid Earnings Recovery