Thursday, KeyBanc Capital initiated coverage of Coach Inc. (COH) stock with a Hold rating. The brokerage established its 2010 EPS estimate of $2.12, and its 2011 estimate of $2.33.
Analyst Edward Yruma thinks Coach has some of the best long-term growth opportunities in coverage universe, but valuation looks fair to him. Moreover, the analyst believes that China presents a compelling long-term opportunity. Nevertheless, valuation looks fair at 17.0x estimated 2010 P/E and 8.3x estimated 2010 EV/EBITDA.
While there has been a 706 basis point operating margin contraction from the company's 2007 38% peak, the analyst thinks that the already enviable margins are unlikely to show significant upside. As such, operating profit growth is predicated largely on sales.
At this stage, the analyst views the U.S. market as largely mature given 340 full-priced and 116 factory stores and about 930 U.S. wholesale accounts. Accessory growth has slowed, providing less of a revenue tailwind. China provides the most interesting long-term growth opportunity for the company and over time the analyst thinks this can easily eclipse Japan's $670.1 million in annual revenue.
Currently, COH is down $0.64 or 1.76% and trading at $35.35.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.