Telsey raises Tapestry stock target to $92, keeps outperform rating

On Friday, Telsey Advisory Group adjusted its outlook on Tapestry Inc. (NYSE:TPR), increasing the price target to $92 from the previous $83, while maintaining an Outperform rating on the company’s shares. The firm’s analyst highlighted Tapestry’s strong performance amid a challenging macroeconomic environment, noting the company’s successful second quarter, which saw significant growth across various regions, excluding Japan, and robust gross margin expansion of 74.77% contributing to earnings surpassing expectations. According to InvestingPro analysis, Tapestry, currently valued at $18.84B, appears to be trading above its Fair Value, with impressive financial metrics that have caught analysts’ attention.

Tapestry’s strategy to elevate its Coach brand has been yielding positive results, particularly in the leather goods segment, and has achieved mid-teens average unit retail (AUR) gains. This performance stands out in comparison to its industry peers, reflected in the stock’s remarkable 130% return over the past six months. Furthermore, Tapestry has raised its fiscal year 2025 (FY25) outlook for the second consecutive quarter, indicating a confident stance despite the ongoing uncertainty and the global luxury market’s general softness. The company has maintained dividend payments for 17 consecutive years, demonstrating consistent shareholder returns.

The revised FY25 earnings per share (EPS) guidance from Tapestry reflects not only the $0.30 EPS beat in Q2 but also anticipates modest additional upside in the latter half of the year. Telsey views this move as a prudent step, considering there are still two quarters remaining in the fiscal year and the persisting global economic uncertainties.

The new price target of $92 is based on a 16.3x multiple applied to Telsey’s two-year forward EPS estimate of $5.66 for Tapestry. This multiple is compared to the recent near-term multiple of 14.7x and the one-year average near-term multiple of 17.0x for the luxury group. The analyst’s positive outlook is supported by Tapestry’s strong quarter performance and proactive management strategies, which appear to position the company well for continued success despite a challenging market.

In other recent news, Tapestry Inc. has been the subject of several analyst notes. Citi analyst Paul Lejuez increased the price target for Tapestry to $85, maintaining a Buy rating. Lejuez forecasts a 1.6% increase in sales growth and anticipates an EPS of $1.76, higher than the consensus estimate. Similarly, Barclays (LON:BARC) upgraded Tapestry’s stock rating to Overweight and raised the price target to $87, citing the company’s advantageous position in the global handbag market. However, CFRA analyst Zachary Warring downgraded the stock rating to Sell, while raising the price target to $56, suggesting that the stock is now overvalued. Lastly, Jefferies analyst Ashley Helgans upgraded Tapestry to Buy and increased the price target to $80, naming Tapestry as a Top Pick for 2025 due to its improving sales growth, expanding margins, and share buyback program. These are recent developments and investors should take note.

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