Wall Street’s recommendations
Kate Spade is covered by 19 Wall Street analysts who have collectively rated the company’s stock a two on a scale where one is a strong buy and five is a strong sell. The company has a better rating compared to competitors Michael Kors (KORS) and Coach (COH). KORS and COH have received ratings of 2.8 and 2.3, respectively.
As reflected by its rating, Wall Street has a bullish outlook on Kate Spade. The company has received 76% “buy” and 23% “hold” recommendations from analysts. There are no sell recommendations yet.
Wells Fargo upgraded Kate in mid-September to an “outperform” from a “market perform” rating. The brokerage firm cited a potentially strong 2H16 top line, a compelling long-term margin opportunity, and low valuations as the key catalysts for the upgrade.
KORS, in comparison, doesn’t seem to appeal much to Wall Street. Only 25% of analysts have recommended a “buy” on the stock. In contrast, 58% of analysts have set a buy on COH.
Stock price movement and potential
Kate Spade is currently trading at $16.37, 58% below its 52-week high price. Wall Street has assigned an average price target of $21.36 on the stock, implying that analysts see the stock price rising about 28% over the next 12 months. Peers KORS and COH have higher potential upsides of 13% and 24% based on the Wall Street target prices.
The individual target prices for KATE range between $17 and $40. BMO Capital Markets has assigned the lowest target price with a market perform rating. Imperial Capital has awarded the highest target price with an “outperform” rating and an upside potential of 125% over the next 12 months.
ETF investors seeking to add exposure to Kate Spade can consider the iShares Morningstar Small-Cap Growth ETF (JKK), which invests 0.42% of its portfolio in the company.