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Nomura: We're Buyers Of Coach As It Buys Kate Spade

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Following the $2.4 billion buyout of rival Kate Spade & Co (NYSE: KATE), Nomura on Tuesday reiterated its Buy rating on Coach Inc (NYSE: COH) and raised its price target from $45 to to $55.

Analysts believe the deal will be accretive to Coach and puts the company “along its path to create a House of Luxury Brands."

Given how fickle the fashion industry is, the deal now gives Coach nearly a third of the $12 billion handbag market in the U.S. This allows Coach’s future success to not be solely dependent on a particular season's hit or miss in the fashion world. Nomura believes consistency is the new growth in the fashion space.

“There is clearly a long way between acquisition and execution, but we see meaningful self-helf opportunities for KATE. As numbers are crunched and accretion models take hold, we expect the rhetoric to evolve, driving upside to both EPS and the stock’s multiple,” Nomura said.

Shares of Coach closed at $45.20.

Latest Ratings for COH

DateFirmActionFromTo
Nov 2017SusquehannaInitiates Coverage OnPositive
Oct 2017BairdMaintainsOutperform
Oct 2017BuckinghamMaintainsBuy

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