Credit Suisse Explains Coach Price Target Slash


Shares of Coach (NYSE: COH) may see downward pressure Thursday after Credit Suisse lowered its price target on the firm. Credit Suisse currently has a Neutral rating on the stock.

Credit Suisse likes many of the initiates Coach is taking, but thinks these may delay earnings. These factors include the closure of 70 stores, brand presence in department stores and fewer flash sale events.

The note also comments on headwinds for the firm. “We believe Coach's outlet business has reached a saturation point, likely weakening brand image in North America and adding to the deterioration of full price sales... While they are invested in improving product (less logos and more leather) and limiting promotions to increase average transaction dollars, we view the surplus of outlet locations as dilutive to the brand and remain cautious on this strategy going forward.”

The price target reduction from $39 to $30 is based on lower 2014 and 2015 earnings.

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