Piper Jaffray's Erinn Murphy Upgrades Coach To Overweight

• Shares of Coach Inc COH have appreciated 3.93 percent over the past month, after having dipped close to their 52 week low on September 28.
• Piper Jaffray’s Erinn E. Murphy has upgraded the rating on the company from Neutral to Overweight, while raising the price target from $33 to $37.
• Murphy believes that the Coach brand is likely to see near term improvement, driven by new product flows, price points being better balanced across its assortment and the gradual return of lapsed customers.

Analyst Erinn Murphy mentioned that quarter to date checks suggest that the company is executing on plan.

“We believe we are seeing the sequential improvement in comp from both a new customer that is coming to the brand from categories like footwear and RTW as well as a lapsed customer that is responding well to Stuart Vever's use of the iconic Coach brand elements including glovetanned leather,” Murphy stated.

Conversion is likely to have continued to improve, driven by tighter promotions year on year, while collections like Swagger are being received well across the globe.

Murphy believes that there are various catalysts that would drive comps to turn positive by FQ4, such as increased penetration of the under $300 handbags, store refreshes prior to the holiday season and increased penetration of the Stuart Vever line at outlets.

Meetings with the CEO and management team during the quarter have raised Murphy’s confidence in the “strategic direction of Coach's turnaround.”