Sterne Agee Starts Off Coach with a “Buy” Rating (COH)

Sterne Agee initiated coverage on accessory designer Coach, Inc. (COH) with a bullish rating on Monday, saying the current share price has decent support levels to help put a bottom on the stock as fundamentals improve.

Th analyst rate COH as a “Buy” with a price target of $58. The valuation suggests a 20% upside to Friday’s closing price of $48.22.

An analyst at Sterne Agee commented, “While the company’s domestic business has admittedly struggled of late due to challenges from younger competitors (such as KORS, Tory Burch and kate spade), the company still has a very appealing global expansion strategy. Even with modest market share and margin declines in the U.S., we believe COH can continue to grow top line and maintain consolidated operating margins driven by growth in Asia-Pac. … While we wouldn’t expect a real inflection in the business for another 6 months (Q3 likely soft as transition to “lifestyle” brand will take some time), a 2.5% dividend yield and an 8% FCF yield should help put a bottom in the stock until fundamentals improve.”

Coach shares were inactive during pre-market trading on Monday. The stock is down about -37% over the past twelve months.

The Bottom Line
Shares of Coach (COH) have a dividend yield of 2.49% based on Friday’s closing price of $48.22 and the company’s annualized dividend payout of $1.20 per share.

Coach, Inc. (COH) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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