All Associated Press newsNEW YORK (AP) - Shares of Coach Inc. rose Friday after an analyst upgraded the stock and said the luxury handbag and accessories maker's business has stabilized.
While luxury goods are often buffered from such economic trends, Coach indicated last year that traffic had been weak at its U.S. stores. However, in January, Coach reported strong second-quarter profit and a 21 percent revenue increase, as sales at its factory stores offset weakness at retail locations.
In a note to investors on Friday, Buckingham Research Group's David J. Glick said Coach's business has stabilized at a time when overall conditions have worsened.
Consumers are cutting back on spending as they face rising gas and food prices and weak credit and housing markets.
Glick said while the consumer remains challenged, and handbag growth is unlikely to resume growing at the 20 percent it was previously, there are other factors working in Coach's favor.
Those include improving Coach results at department stores, and innovative new product offerings for the fall that are being reviewed well, Glick said.
"Earnings growth is more reliable than we had anticipated as the company confirmed second-half earnings per share guidance last month, despite the tough environment," Glick wrote.
He upgraded the stock to "Strong Buy" from "Neutral" and set a $45 price target.
Shares rose $1.47, or 4.6 percent, to $33.70 during midday trading. The stock has traded between $23.22 to $54 during the past 52 weeks.