UPDATE: Canaccord Genuity Reiterates Buy Rating, Lowers PT on Coach

In a report published Wednesday, Canaccord Genuity reiterated its Buy rating on Coach COH, but lowered its price target from $71.00 to $68.00. Canaccord Genuity noted, “COH reported Q2 EPS of $1.23, $0.08 below our estimate and $0.05 short of consensus. Sales trends deteriorated in North America during the holiday season as U.S. SSS declined 2% on top of +8.8%. We had forecast +5%, and consensus was +3%. Management commented the weakness was largely the result of a tepid macroeconomic climate and a more aggressive competitive environment. Traffic declined across both channels as COH maintained pricing discipline while competitors accelerated promotional activity. The top-line softness was partially offset by lower SG&A expenses versus our forecast. The SG&A expense rate deleveraged 100bps, better than the 185bps increase we had expected. We are maintaining our BUY rating as we believe COH's ROIC, at more than double the retail group's average, is not fully priced in at 13x our CY13 EPS estimate and 7x CY13E EV/EBITDA based on intra-day trading.” Coach closed on Tuesday at $51.22.