UPDATE: Bank of America Initiates Coverage on Kate Spade & Co. with Neutral Rating, $28 PT as Long-Term Growth Potential is Priced In

In a report published Tuesday, Bank of America analyst Heather Balsky initiated coverage on Kate Spade & Co. KATE with a Neutral rating and $28.00 price target. In the report, Bank of America noted, “We are initiating coverage of Kate Spade with a Neutral rating. Kate Spade is an affordable luxury retailer with a portfolio of three global brands, kate spade new york, Kate Spade Saturday and Jack Spade. Kate offers outsized long-term earnings growth driven by market share gains and margin expansion, but we think share price upside is limited by the stock's premium multiple (39x our 2015 EPS estimate) and near-term sales and margin constraints. Our $28 Price Objective reflects a 1.1x PE/Growth ratio and a 43x P/E multiple our 2015 estimate.” Kate Spade & Co. closed on Monday at $25.86.