Jefferies Adds Coach To Franchise Picks List: What You Should Know

In a report published Tuesday, Jefferies analyst Randal J. Konik added

to the Franchise Picks List, while upgrading the rating from Hold to Buy and raising the price target from $35 to $50. Analyst Randal Konik pointed out that although Coach's turnaround initiatives were taking hold, markets were yet to appreciate them. A survey of the handbag industry revealed that Coach continued to be the market leader, with 32 percent of the respondents selecting the company as their "top favorite handbag brand." The upgrade was based on Coach's ability to boost its earnings as its turnaround initiatives took hold, Konik mentioned, while adding that the company's fundamentals appeared to be bottoming, beginning with sales, "which we expect to return to growth in F'2016 followed by margin re-expansion in F'2017." In the report Jefferies noted, "Survey results show COH is starting to attract more new customers at a faster rate than any churn to the legacy customer base. Plus, we expect COH's remodel initiative to help fuel the return to positive comps, driving cost leverage & margin re-expansion." "Overall, our conviction in the turnaround is reflected in our above cons. estimates for FY'17 and FY'18. We also believe multiples will re-expand beyond current levels as investors gain confidence that repositioning initiatives are working & the industry remains healthy," Konik added.