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Buy Coach on red-hot Mickey Mouse line: Analyst

Coach collaborates with Disney with line of handbags and accessories.
Source: Coach Inc.

Investors should buy Coach as the recent product collaboration with Disney is exceeding expectations, according to Piper Jaffray.

The "Disney x Coach" line launched June 17 with 36 Mickey Mouse products such as bags, wallets and apparel.

"Our channel checks suggest: 1) the Mickey launch is besting expectations; 2) select colors have already sold out online of the Saddle Bag, Skinny Tote and Kisslock (to name a few); 3) social media engagement is exceeding Snoopy; and 4) traffic is being compared to that of a week during Christmas," Piper Jaffray's Erinn Murphy wrote in a note to clients Tuesday.

She added that sales will get another lift when Coach likely begins selling Mickey Mouse-related products in its outlet stores.

"Given the early success of the Mickey collaboration, we believe it is possible the line will be translated into outlet 12-18 months down the road, similar to Coach's Peanuts collaboration," the report said.