Analyst Reiterates Bullish Stance On Tapestry, Says China Remains Biggest Opportunity

After hosting an investor dinner with several Tapestry Inc TPR executives including CEO Victor Luis, Piper Jaffray maintains its bullish stance on the company.

The Analyst

Piper Jaffray analyst Erinn Murphy reiterated an Overweight rating with a $40 price target.

The Thesis

Murphy said Tapestry management is confident in the multi-brand strategy and reiterated their view to achieve double-digit EBIT growth in fiscal year 2020. The Kate Spade transition is underway and by the end of June, over 90 percent of full-price products will be from new creative director Nicola Glass.

“While management acknowledged the overall North America retail climate has been 'choppier' year-to-date, trends overseas are particularly strong and they are not seeing pressure in their China business,” Murphy wrote in the note.

Murphy said "several investors were keen to unpack trends in China and around global tourism." China is still the largest opportunity across the company’s portfolio from a regional perspective and management indicated they haven't seen anti-American sentiment arise or pressure their businesses.

Tapestry’s Coach brand continues to expect "modest" North American category growth and sees opportunity for average unit retail growth in outlets.

Price Action

Tapestry shares traded around $30.15 at time of publication.

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Photo by Fashionmouse/Wikimedia.