Retail

Analysts Liked What They Saw From Coach Earnings

Paul Ausick

Published: April 27, 2016 2:01 pm

Last Updated: January 13, 2020 10:12 am

Luxury accessories maker Coach Inc. (NYSE: COH) beat analysts’ estimates on both the top and bottom lines Tuesday morning, giving the stock a boost of more than 3% on the day. The good news continued on Wednesday with the shares posting a new 52-week high in the afternoon.

The earnings surprise was three cents per share, and the 7% beat was the largest in four straight quarters that Coach has beaten profit estimates. Same-store performance was positive for the first time in 12 quarters, according to Wells Fargo’s analyst cited in Barron’s. Coach’s management continues to target a 20% operating margin in the 2017 fiscal year, but Citi’s analyst, also cited in Barron’s, thinks that the goal depends largely on cuts to SG&A rather than business fundamentals.

For the company’s fiscal fourth quarter ending in June, analysts have an earnings per share forecast of $0.40 with revenues of $1.16 billion, both significantly higher that in the same period in 2015. For the 2016 fiscal year, profits are pegged at $1.91 per share on sales of $4.48 billion. Analysts’ estimates for the 2017 fiscal year call for per-share earnings of $2.14 and $4.66 billion in revenue.

Other analyst reaction that we’ve seen basically sticks with ratings and raises price targets:

• Goldman Sachs raised its price target from $28 to $32 but maintained its Sell rating.
• Keybanc upped its price target from $46 to $50 with an Overweight rating.
• RBC raised its price target from $42 to $46 and has an Outperform rating.
• Topeka Capital boosted its target price from $47 to $50 with a Buy rating.
• UBS raised its price target from $46 to $48.
• Wedbush increased its price target from $39 to $42 with a Neutral rating.

In the mid-afternoon on Tuesday, Coach shares traded at $41.88, in a 52-week range of $27.22 to $42.13. The high was set earlier in the day. The consensus price target on the stock is $41.53, an estimate that probably does not include the latest changes.