Shares of Coach Inc. shed 1.9% to a seven-month low in midday trade Wednesday, after Morgan Stanley turned bearish on the high-end accessories seller, citing concerns over valuation given uncertainty over the outlook for sales growth. Analyst Kimberly Greenberger downgraded Coach back to underweight, after upgraded the company to equal weight on Dec. 17, 2015. Her stock price target stays at $32, which 10% below current levels. Greenberger said she had upgraded the stock late last year because she believed that "less bad" results would be enough to move the stock higher. The stock then rallied as much as 33% to 1 1/2-year closing high of $43.46 on Aug. 1, before selling off again, which makes her believe the move she was expecting had already materialized. Greenberger also questions whether a sustainable sales turnaround to justify the gains this year is really occurring. "Our definition of a turnaround is sales growth with stable margins or stable sales with margin improvement, but [Coach] has not delivered this yet," Greenberger wrote in a note to clients. The stock was still up 8.8% year to date, while the S&P 500 has gained 4.5%.
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