Guidance Is Top Focus For Coach, Says Deutsche Bank

With Coach Inc COH set to release fiscal Q4 earnings ahead of the market open on Tuesday morning, Deutsche Bank analyst Dave Weiner has outlined what investors should be watching for. Of course, revenue and earnings will be important, but guidance will be key.

“The primary focus of Tuesday’s F4Q results will be the Coach brand’s north American comp, which is forecast to inflect positively this quarter,” Weiner explains.

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Management has long predicted that North American comps would turn positive in FQ4, but Weiner notes that Kate Spade & Co KATE comps fell well short of market expectations.

Last quarter, the North American premium women’s handbag & accessories market grew at a single-digit rate, a market improvement over the previous quarter’s flat growth. Deutsche Bank will be watching closely to see if this trend continues or if last quarter was simply an outlier.

Coach management will also issue its highly-anticipated fiscal 2017 guidance on Tuesday. Analysts are predicting 4 percent revenue growth on a 19.0 percent operating margin.

Deutsche Bank maintains its Hold rating and $43 price target for Coach ahead of earnings. The price target represents a 19.2x multiple on estimated fiscal 2017 earnings.

Disclosure: the author holds no position in the stocks mentioned.