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New York-based Tapestry, Inc. (TPR), with a market cap of $9.7 billion, designs and markets luxury accessories and gifts for women and men. The company operates under Coach; Kate Spade & Company; and Stuart Weitzman segments.
Shares of the luxury accessories retailer have lagged behind the broader market in the last year. While TPR has surged 1.6% over this time frame, the broader S&P 500 Index ($SPX) is up 24.5%. However, things are looking bright for the stock, as in 2024, the stock rose 15.1%, compared to SPX’s 9.8% return on a YTD basis.
Narrowing the focus, TPR also trails behind the S&P 500 Cons Disc Sector SPDR (XLY). The exchange-traded fund has gained 15.5% over the past year, outperforming TPR’s low single-digit return for the period.
Tapestry’s underperformance over the past year relative to the broader market can be attributed to macroeconomic headwinds and uncertainties surrounding the acquisition of luxury company Capri Holdings Limited (CPRI), which was announced last year. The Federal Trade Commission (FTC) recently raised concerns about serial acquisitions in a lawsuit to block Tapestry from acquiring Capri Holdings, claiming that the $8.5 billion merger would reduce competition in the accessible luxury handbag market.
Despite these challenges, shares of Tapestry rose 3.6% following its fiscal Q3 earnings results on May 9, even though it missed analysts' expectations. The company also updated its fiscal 2024 guidance.
For the current fiscal year, ending in June, analysts expect TPR’s EPS to soar 8.8% year over year to $4.22. However, the company’s earnings surprise history is mixed. It exceeded the consensus estimate in three of the last four quarters while missing on one other occasion.
Tapestry stock has a consensus “Moderate Buy” rating. Out of 18 analysts covering the stock, 12 recommend a "Strong Buy," one suggests a "Moderate Buy," and five advise a "Hold."
The consensus rating has been consistent over the past months.
On May 10, analysts at Robert W. Baird trimmed Tapestry's price target from $52 to $50. The brokerage firm maintains an “Outperform” rating on the stock.
The mean price target of $48.41 suggests a 14.3% premium to TPR from current levels. The Street-high target of $60 represents an upside potential of 41.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
