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On Thursday, Morgan Stanley (NYSE:MS) analysts upgraded Tapestry Inc. (NYSE: NYSE:TPR) stock rating from Equalweight to Overweight and increased the price target to $90 from the previous $75. The revision reflects a positive shift in the factors that previously influenced the firm’s neutral stance on the company. The upgrade comes as Tapestry demonstrates impressive performance, with InvestingPro data showing a remarkable 96.9% return over the past year and maintaining a strong gross profit margin of 74.8%.
The analysts highlighted three key reasons for the upgrade. First, certain elements that had been part of their rationale for the Equalweight rating have seen favorable developments. Second, they anticipate that near-term earnings per share (EPS) revisions for Tapestry will likely be positive. This potential for upward EPS revisions is expected to contribute to a further re-rating of the company’s valuation. According to InvestingPro analysis, Tapestry maintains a healthy financial position with a GOOD overall health score, operating with moderate debt levels and liquid assets exceeding short-term obligations.
Additionally, Tapestry’s ability to handle tariffs effectively and maintain brand momentum were cited as distinguishing factors that make the company stand out in the current market environment. The analysts expressed confidence in Tapestry’s resilience and its capacity to continue its positive trajectory amidst market challenges.
The raised price target to $90 indicates Morgan Stanley’s increased optimism about Tapestry’s financial performance and future prospects. This upgrade and new price target suggest that the firm sees a higher potential for investment returns from Tapestry stock in the foreseeable future.
In other recent news, Tapestry Inc. reported robust financial results for the third quarter of fiscal year 2025, exceeding analysts’ expectations. The company posted an earnings per share (EPS) of $1.03, surpassing the forecasted $0.88, and reported revenue of $1.6 billion, which also beat the anticipated $1.53 billion. Tapestry raised its fiscal 2025 revenue guidance to $6.95 billion, indicating a 4% growth, and expects an EPS increase to approximately $5, reflecting high teens growth. The company’s gross margin reached a 15-year high of 76.1%, highlighting strong operational performance. Additionally, Tapestry announced a definitive agreement to sell its Stuart Weitzman brand to Caleres (NYSE:CAL), with the transaction expected to close in the summer. Analyst discussions during the earnings call highlighted the company’s strategic initiatives, including tariff mitigation strategies and the focus on brand innovation. Tapestry’s leadership emphasized the company’s competitive advantages, such as its agile supply chain and strong brand positioning, which continue to drive its success in the luxury market.
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