Tapestry Stock Surges on Coach Brand Momentum: Redburn Atlantic Upgrades to 'Strong Buy'

Tapestry, Inc. (TPR) shares surged on Thursday after Redburn Atlantic upgraded the luxury goods retailer's stock to 'Strong Buy' from 'Hold,' citing the strong momentum of its Coach brand. The upgrade comes on the heels of Tapestry's fiscal second quarter results, which exceeded expectations and led to an increase in the company's full-year guidance.

In the fiscal second quarter, Tapestry reported revenue of $2.19 billion, up 10.5% year-over-year, driven by double-digit growth in the Coach brand. Earnings per share (EPS) increased by 14.3% to $1.38, beating analysts' estimates. The company also raised its full-year guidance, expecting revenue to exceed $6.85 billion and EPS to be between $4.85 and $4.90.

Redburn Atlantic analyst Daniela Nedialkova upgraded Tapestry's stock rating, citing the strong performance of the Coach brand and the company's robust financial outlook. Nedialkova noted that Coach's sales increased by 15% year-over-year in the second quarter, driven by strong demand for its Tabby bags and other products. She also highlighted the company's strong direct-to-consumer channel, which saw digital sales increase by 15% year-over-year.



Tapestry's strong financial performance and the momentum of its Coach brand have also led to an upgrade in the company's fiscal 2025 guidance. The company now expects full-year revenues to exceed $6.85 billion, marking a 3% year-over-year increase despite currency headwinds. Operating margin expansion is expected to be 100 basis points from the prior-year actual, and EPS is forecasted between $4.85 and $4.90, implying 13-14% growth from the prior-year number.

The Coach brand's success has also positively impacted Tapestry's stock valuation. The company's forward 12-month P/E ratio is 17.00, which is lower than the industry and the sector's ratios of 19.25 and 25.64, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. Moreover, TPR's Value Score of A underscores its appeal as an investment option.

Analysts have responded positively to Tapestry's prospects, as reflected in the upward revisions in the Zacks Consensus Estimate for EPS. In the past seven days, analysts have increased their estimates for the current fiscal year by 7 cents. The consensus estimate for earnings is pegged at $4.91 per share. The consensus estimate for the next fiscal year has also been raised 9 cents to $5.30 per share.

In conclusion, Tapestry's strong financial performance, strategic growth initiatives, and the momentum of its Coach brand have led to an upgrade in the company's stock rating by Redburn Atlantic. The company's operational efficiency, direct-to-consumer strength, and AI-driven customer engagement have driven sustained momentum and resilience, making Tapestry an attractive investment option in the luxury retail space. Positive analyst revisions and an attractive valuation further boost investor confidence in Tapestry's long-term growth trajectory.