UPDATE: Canaccord Genuity Upgrades Coach (COH) to Buy, Industry-Leading ROIC at a Discount

(Updated - August 7, 2012 8:50 AM EDT)

Canaccord Genuity upgraded Coach (NYSE: COH) from Hold to Buy with a price target of $71.00.

Analyst Laura Champine comments, "COH shares have declined 10% YTD versus the S&P 500 index +11%, the RLX index +20%, and the luxury peer group +16%. We believe investors overreacted following COH’s report of weakness in its N.A. factory business in Q4. The stock’s current multiples of 14x F2013E EPS and 8x F2013E EV/EBITDA provide investors with an attractive entry point in our view. We expect the return of couponing will help the factory channel rebound, and the recently launched Legacy collection appears on track to become COH’s top-selling line. We believe COH’s China business will become a greater contributor to profitability as it ramps from 11% of the store base in F2012 to a projected 21% by F2017. Shares currently trade at a discount of over 25% to the luxury group versus a historic valuation gap of about 15%. We do not believe this discount is justified given that COH boasts industry-leading margins and returns."

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 $54.84 yesterday.

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