NEW YORK (TheStreet) -- Shares of Coach Inc. (COH) were up by 1.71% to $36.36 in pre-market trading, before going flat, on Thursday, after analysts at Oppenheimer initiated coverage on the stock with a "Perform" rating and $36 price target.
The firm said it initiated coverage on the designer handbag, clothing, accessories, and shoe retailer as it believes Coach "should be well positioned to take advantage of the rapidly growing handbag industry and benefit from easing comparisons/expansion of underpenetrated categories."
"However, competitive pressures are intensifying and Coach adopts less promotional stance through brand transformation," Oppenheimer added.
The firm estimates that Coach's earnings for 2015 will be $1.87 per share, and $2 per share for 2016.
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 weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COH's debt-to-equity ratio is very low at 0.07 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.37, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for COACH INC is currently very high, coming in at 73.32%. Regardless of COH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.46% trails the industry average.
- 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 45.3% when compared to the same quarter one year ago, falling from $217.88 million to $119.10 million.
- Net operating cash flow has decreased to $138.90 million or 15.35% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: COH Ratings Report