Pro Analysis

Coach shares to rally 18% on strong demand: Analyst

Shoppers pass a Coach display in Macy's, New York.
Scott Mlyn | CNBC
Shoppers pass a Coach display in Macy's, New York.

Investors should buy Coach shares because of an improving brand image and because it is less dependent on department stores than competitors, said Telsey Advisory Group, which raised the handbag maker's rating to outperform from market perform.

"Heading into next week, we are incrementally positive on COH for its smaller wholesale exposure, successful brand elevation, and potential to put cash balances to accretive use." Dana Telsey, the CEO of the brokerage firm, said in a Friday note to clients. "We see a return to positive comps in the fourth quarter and through next year as a potential catalyst. We also see Coach's significantly smaller exposure to the transitioning US department store channel as a meaningful benefit to sales and profitability relative to its peers as well."