Why Susquehanna Analysts Love Coach Stock Before Earnings: Brand Relevance

• Coach Inc COH has seen a 6.11 percent increase in its share price over the past one month, from a low of $27.49 on September 28.
• Susquehanna’s Thomas A. Filandro has initiated coverage of the company with a Positive rating and price target of $40.
• Filandro believes that the company’s brand relevance is on an uptrend, which would drive topline stabilization in the near term, along with sales and profit acceleration in the medium to long term.

Analyst Thomas Filandro believes that Coach’s “share performance will hinge on the success of brand revitalization in NA, which we believe has reached a tipping point.”

With the share price more than 30 percent off its 52 week high, as well as a robust 4.5 percent dividend yield, Filandro believes that it is an attractive opportunity to own a “highly recognizable and evolving brand,” with a compelling risk-reward profile.

According to the Susquehanna report, Coach offers a “re-platformed product with clear creative direction that is design led, comprising innovative lifestyle offerings with deliberate investments in quality and unique details igniting brand resurgence and design credibility.”

The company’s integrated marketing strategy comprises disruptive and innovative campaigns, which elevate the brand to a “modern luxury positioning, fueling elevated emotional and aspirational relevance.”

The new and improved store design is a crucial transformational element for the company, with the 40 percent rollout of the modern luxury concept expected by end-FY16. Coach also intends to close its underperforming stores in North America, while elevating the positioning of 12 of its key North American markets, with an emphasis on its flagships.