Coach's Shares Still Have Room to Rise: Analyst

The luxury apparel shopper is on her way back, and high-end retailer Coach will continue to be one of the beneficiaries, Piper Jaffray Senior Research Analyst Neely Tamminga told CNBC Tuesday.

The company's shares have room to keep rising—they neared a 2 1/2-year high on Tuesday—as the handbag and leather goods maker continues to expand into new categories and regions.

"This is a sector that's been starved for the last couple of years, as [the consumer] was definitely concerned about the recession," Tamminga said. "But for those who are employed, it's clear that she's coming back."

Echoing comments made by JPMorgan when it upgraded the company's stock last week, Tamminga said Coach has further opportunity in China, where it currently has about 3 percent market share.

She cited the company's 14 percent market share in Japan, saying that with its recent expansion into China, it "can keep going higher." Coach has previously stated a goal of achieving 10 percent market share in China over the next few years, and expanding from 37 to 50 locations.

Tamminga also said the company was prudent in cutting back on expenses during the recession, which will enable it to reach profitability levels seen in prior cycles.

"This is a creatively driven company. We wouldn't want to see them cut too much of that back out," she said.

Wall Street Strategies analyst Brian Sozzi said the company has more successfully anticipated trends than other retailers—for instance, by becoming less devoted to bags marked with its signature "C." This falls in line with consumers becoming less focused on showing off brands.

Coach's mens categories also have room to grow, Sozzi said.

"I think the Reed Krakoff line is a step in the right direction in tapping into this underserved market," he said.

The luxury sector was hit especially hard during the downturn, as consumers tightened their discretionary spending. But analysts commended Coach's new Poppy line, which has a 10 to 15 percent lower opening price point, as helping cost-conscious consumers make purchases without diluting the brand.

The company's stock, which touched $40.74 before ending the session at $39.91 on Tuesday, has surged more than 200 percent since the market's bottom last March. Click here for after-hours Coach quotes.

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