Why tapestry is up 9% today

What happened

Tapestry (TPR -2.80% )parent company of luxury brands Coach and Kate Spade, saw its share price jump almost 10% today at 12:40 p.m. EDT, after a Deutsche Bank analyst reported on several positive developments.

So what

DB analyst Paul Trussell upgraded his rating on Tapestry from Hold to Buy and raised his price target from $18 to $21, a 25% upside from at yesterday’s closing price.

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When Tapestry reported its fiscal fourth quarter results last month, it reported a 53% decline in sales but said it had exceeded internal estimates. He said digital sales jumped triple digits from the year-ago period. The retailer has an “acceleration program” underway, aiming to become more consumer-focused, use data to drive growth in its e-commerce, and work internally to become more agile and responsive.

Now what

Trussell said he believes these efforts are paying off and will result in better margins for fiscal 2021 and 2022. The improvement program reduced expenses by $300 million in fiscal 2020, a Tapestry said in its earnings release, and the company expects an additional $200 in cost. savings for fiscal year 2021.

Trussell also said he believes the company’s valuation is poised to more in line with that of its specialty retail and footwear peers. He said the revised earnings-per-share estimates, along with the revenue boost, will allow the company’s price-to-earnings ratio to grow further in line with its peers from its March lows, pushing it up around 25%. % of stock price over yesterday’s close. .

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