Tapestry is trading at attractive levels after its third-quarter earnings report reinforced investor concerns about demand for affordable luxury fashion, making now a good time to buy shares of the Coach owner, according to JPMorgan. The investment bank rated Tapestry, which also owns Kate Spade New York, as overweight and raised its price target on the stock to $200 from $190, a rise of more than 50% from Thursday’s close. “Buy the dip,” analyst Matthew Boss said in a note to clients on Friday. “We see TPR’s earnings growth accelerating with opportunities in total revenue, gross margin, [selling, general and administrative]and capital allocation lead to a return to double-digit compound interest [total shareholder return]according to our model.” Tapestry gave investors a weak forecast when it released its latest financial results on Thursday, sending the stock down more than 12%. In particular, the outlook for sales growth in the June quarter disappointed investors concerned about headwinds from affordable luxury brands. However, JPMorgan is more optimistic, saying Coach has experienced a brand revival in recent years that has allowed it to gain traction with Gen-Z shoppers and strengthen its balance sheet. Coach Led Tapestry Sales Increases In the third quarter, the company outperformed other brands in its portfolio, such as Spade and Stuart Weitzman. The investment bank’s statement is in line with Wall Street consensus, where 15 of 24 analysts who cover Tapestry have given either a buy or strong buy rating on the stock, LSEG data shows.
