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NEW YORK (TheStreet) -- Shares of Coach Inc. (COH) are higher by 2.76% to $42.86 at the start of trading on Tuesday morning, following a ratings upgrade to "outperform" from "market perform" at Oppenheimer.

The firm said it raised its rating on the designer and retailer of luxury apparel, handbags, shoes, and accessories based on higher traffic seen in the company's outlet unit and a new designer that is helping to stabilize the business.

Oppenheimer has a $50 price target on Coach stock.

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"Under leadership of Creative Designer Stuart Vevers (two quarters of full-price channel influence, outlet impact just beginning), we believe fundamentals are close to bottom and we are starting to see signs of brand stabilization. While we still expect full-price to lead recovery, we think more significant outlet channel (~60-70%/profits) is seeing improved traffic as elevated product with promotions pulled back is resonating," Oppenheimer said in an analyst note.

Separately, TheStreet Ratings team rates COACH INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate COACH INC (COH) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • COH's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, COH has a quick ratio of 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $444.70 million or 11.07% when compared to the same quarter last year. Despite an increase in cash flow, COACH INC's cash flow growth rate is still lower than the industry average growth rate of 44.77%.
  • COACH INC's earnings per share declined by 37.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, COACH INC reported lower earnings of $2.78 versus $3.62 in the prior year. For the next year, the market is expecting a contraction of 32.4% in earnings ($1.88 versus $2.78).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income has significantly decreased by 38.3% when compared to the same quarter one year ago, falling from $297.44 million to $183.50 million.
  • You can view the full analysis from the report here: COH Ratings Report