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Pro Analysis

Buy Coach on red-hot Mickey Mouse line: Analyst

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

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.