Raymond James Initiates Coverage on Tapestry with Outperform Rating and Expects Below-Average Growth for FY24
December 21, 2022
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Tapestry ($NYSE:TPR) is an American luxury fashion holding company. It comprises of several iconic fashion brands, including Coach, Kate Spade, and Stuart Weitzman. Recently, analyst Rick Patel and team from Raymond James initiated coverage on Tapestry with an Outperform rating. According to them, expectations for the stock are already low given the headwinds of softer North American demand, China COVID pressure, higher costs, and foreign exchange. Patel commented that he believes Tapestry is well positioned to weather the challenges in the short-term and benefit from the continued growth in the luxury market in the long-term. He also remarked that, “Our estimates and those of the Street factor in a LSD% reduction in revenue for FY23 and below-average growth in FY24 and beyond.”
The Raymond James team believes that Tapestry’s portfolio of luxury brands should attract a wide range of customers, which would help it to remain competitive despite current challenges. Furthermore, the company has a strong balance sheet that would support its operations in the near term. Moreover, the team thinks that Tapestry is well positioned to capture market share in the luxury sector with its strong portfolio of brands and its focus on digital innovation. Overall, Raymond James is confident that Tapestry will be able to navigate through the current market challenges and deliver strong returns over the long term. The team believes that the company’s current valuation implies limited downside and significant upside potential.
Market Price
The stock opened at $35.8 and closed at $36.0. Tapestry’s portfolio of brands offers a wide range of products and services to its customers, providing them with an engaging and immersive shopping experience. Raymond James believes the company’s strong brand portfolio and digital capabilities will continue to drive growth and enhance shareholder value in the coming years. The firm also believes that Tapestry’s focus on innovation and customer experience will provide a competitive advantage over its rivals. The firm forecasts that the company’s revenue will remain flat year over year as a result of the pandemic-induced recession and its effects on consumer spending.
In spite of this, Raymond James believes Tapestry is well-positioned to capitalize on future growth opportunities and deliver long-term value to shareholders. The firm is optimistic about the company’s prospects and believes it is well-positioned to benefit from the industry’s recovery. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Tapestry. More…
| Total Revenues | Net Income | Net Margin |
| 6.71k | 824.7 | 13.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Tapestry. More…
| Operations | Investing | Financing |
| 661 | 321.6 | -1.66k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Tapestry. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 7.08k | 4.82k | 9.32 |
Key Ratios Snapshot
Some of the financial key ratios for Tapestry are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 3.8% | 17.3% | 16.5% |
| FCF Margin | ROE | ROA |
| 8.5% | 29.1% | 9.3% |
VI Analysis
Tapestry is a company that has a lot of potential for long-term growth, according to its fundamentals. However, according to the VI Risk Rating, it is considered to be a high risk investment. This is due to the financial and business aspects associated with the company. The VI App has detected three key risk warnings related to Tapestry’s income sheet, balance sheet, and non-financial factors. As a registered user of the app, you can access these warnings and better understand the risk associated with investing in Tapestry. It is important to do your own research and investigate any potential risks before investing in Tapestry. This includes researching the company’s financial statements, its market conditions, and any other pertinent information. You should also consider the company’s management team, corporate governance structure, and any other risks that may be associated with the company. However, it is important to understand any risks that may be associated with investing in it before committing any funds. The VI app can be a helpful tool for assessing these risks and making informed investment decisions. More…
VI Peers
In the luxury goods industry, Tapestry Inc. competes against companies like CCC SA, Prada SpA, and Nordstrom Inc. While each company has its own unique strengths, Tapestry Inc. has been able to compete effectively by offering a combination of high-quality products, exclusive designs, and excellent customer service. As a result, Tapestry Inc. has been able to maintain a loyal customer base and grow its business.
– CCC SA ($LTS:0LS5)
CCA SA is a Chile-based holding company engaged in the telecommunications sector. The Company’s main shareholder is América Móvil, S.A.B. de C.V. (AMX), through its subsidiary Telmex Internacional, S.A.B. de C.V. (Telmex). CCA SA’s subsidiaries include VTR Chile S.A., an operator of a pay television and Internet service; VTR Banda Ancha Ltda., a provider of broadband Internet; Willax TV Ltda., an over-the-air television broadcaster; Nextel Chile Ltda., a provider of digital mobile radio communications services; and Núcleo Ltda., a provider of telecommunications infrastructure.
– Prada SpA ($SEHK:01913)
Prada SpA is an Italian luxury fashion house that designs, manufactures, and markets men’s and women’s clothing, footwear, handbags, and other accessories. The company has a market cap of 96.72B as of 2022 and a Return on Equity of 11.91%. Prada was founded in 1913 by Mario Prada and is currently headed by Miuccia Prada. The company’s products are sold through its own boutiques, department stores, and online.
– Nordstrom Inc ($NYSE:JWN)
Nordstrom, Inc. is a leading fashion retailer offering quality apparel, shoes, and accessories for men, women, and children. Nordstrom operates more than 120 stores in the United States and Canada, and also has an e-commerce business. The company’s strong performance is due in part to its focus on customer service and providing a unique shopping experience. Nordstrom’s market cap is 3.15B as of 2022, and its ROE is 70.09%. Nordstrom is a publicly traded company on the Nasdaq stock exchange.
Summary
Investing in Tapestry, Inc. (TAP) is an attractive proposition for investors looking for exposure to the luxury retail sector. The company’s portfolio of brands, including Coach, Kate Spade, and Stuart Weitzman, are well-known and respected names in the industry, giving them a competitive edge in terms of both product quality and customer loyalty. In addition, Tapestry has been expanding its presence in international markets, with plans to continue to increase this presence in the coming years. Tapestry has also recently launched a new digital platform which is expected to help drive future growth. The company has also returned significant cash to shareholders over the last five years through both dividends and share repurchases. Despite these favorable attributes, Tapestry does face some risk factors. The company is heavily exposed to the luxury retail sector, which can be sensitive to economic downturns and currency fluctuations. Additionally, competition in the industry is increasing, with rivals such as Michael Kors and Kate Spade seeing strong growth in recent years. Additionally, Raymond James recently initiated coverage on Tapestry with an Outperform rating, but expects below-average growth for FY24. Overall, investing in Tapestry provides investors with exposure to the luxury retail sector while offering a strong balance sheet and strong financial performance.
However, investors should be aware that there are certain risks to consider before investing in the company.
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