UBS has moved Tapestry Inc. (TPR) to a Buy recommendation from Neutral and raised its price target to $187, a 32% increase from its prior projection. The upgrade and target lift reflect what the bank describes as renewed momentum at Coach and the company's emerging profile in digital deployment.
Analyst Jay Sole pointed to several factors that prompted the change. He highlighted the successful execution of a customer acquisition program aimed at younger consumers, stronger-than-expected traction with Gen-Z shoppers, and rapid sales growth in Coach's Greater China operations. UBS also emphasized that the brand's expanding total addressable market supports expectations for more durable sales trajectories.
In UBS's recent internal analysis, Tapestry ranked as "a top deployer of AI" among retail peers, a factor the firm said contributes to the company's competitive positioning. Sole said these operational trends, together with the company's product expansion, underlie the decision to upgrade the stock.
On the earnings front, Sole raised his four-year EPS growth projection to 13.5% from a prior 5% forecast. His estimates for fiscal year 2027 and fiscal year 2028 EPS now sit 13% and 17% above consensus, respectively, according to UBS's modeling. The bank noted that the stock's roughly 12% decline after Tapestry's third-quarter results presents what it views as an attractive entry point; UBS calculates the shares currently trade at about 14 times its fiscal 2028 EPS estimate.
UBS said the upgrade also reflects the easing of two prior investor concerns. Management has demonstrated an ability to "comp the comp" in North America, addressing comparable-store sales worries, and the company's push into secondary categories such as footwear "has proven fruitful," the bank said.
From a valuation perspective, UBS's $187 price target is derived from applying a 20-times multiple to its fiscal 2028 EPS estimate of $9.35, a framework that implies roughly 43% upside from current levels under UBS's assumptions. The firm additionally noted that investor demand for high-quality growth names with robust gross margin profiles and limited sensitivity to oil-price swings aligns with Tapestry's characteristics.
What UBS changed
- Rating upgraded to Buy from Neutral.
- Price target raised by 32% to $187, based on 20x fiscal 2028 EPS of $9.35.
- Four-year EPS growth forecast increased to 13.5% from 5%.
Context
UBS cited Coach's accelerating sales momentum, success in attracting younger customers, faster-than-expected growth in Greater China, favorable category expansion outcomes, and the firm's ranking of Tapestry as a leader in AI deployment in retail as the combined rationale for the upgrade and higher target.