Finance Halo
Company Overview
Tapestry, Inc. (TPR) is a global luxury fashion holding company. It owns three iconic brands: Coach, Kate Spade, and Stuart Weitzman. These brands offer a wide range of products including women's and men's accessories, footwear, and ready-to-wear apparel. Tapestry operates globally with a strong presence in North America, Europe, and Asia, and has been focused on leveraging its multi-brand house of brands strategy to drive growth and enhance shareholder value.
Price Action Analysis
Daily Chart (3-Month): The daily chart shows Tapestry Inc. (TPR) in a significant uptrend. After a period of consolidation roughly between mid-November and early December, the stock has experienced a notable breakout. The price action displays a series of higher highs and higher lows, indicating bullish momentum. Volume has been increasing as the price moves higher, particularly in the last few trading days, suggesting strong conviction behind the breakout. The current price action is testing and likely surpassing prior resistance levels seen in late December and early January.
Weekly Chart (2-Year): The weekly chart provides a longer-term perspective, confirming the uptrend that has been in place for much of the past two years, with a significant acceleration in the latter half of 2023 and into early 2024. The chart highlights a period of tight consolidation before the recent surge. The volume on the weekly chart shows a substantial increase accompanying the current upward price movement, reinforcing the breakout's strength. Key resistance levels from earlier in the 2-year period appear to have been overcome, setting the stage for potential further upside.
News & Catalysts
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"Tapestry, Inc. (TPR) Stock Sees Analyst Upgrades Amid Strong Holiday Sales Outlook" (Source: Investor's Business Daily, January 2024) - This headline suggests positive analyst sentiment, likely driven by expectations of robust holiday season performance. Such upgrades can act as a catalyst, attracting more investor interest and potentially driving the stock price higher. The report indicates that analysts are factoring in strong consumer demand for Tapestry's brands.
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"Tapestry Beats Earnings Expectations, Raises Guidance" (Source: CNBC, October 2023) - While from the previous quarter, this news signifies Tapestry's ability to meet and exceed financial expectations. Positive earnings surprises and raised guidance are strong fundamental catalysts that often lead to sustained upward price momentum and increased trading volume as the market reacts to improved financial health and future prospects.
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"Coach Brand Continues to Drive Growth for Tapestry" (Source: Reuters, November 2023) - Reports highlighting the strength of core brands like Coach provide evidence of Tapestry's successful brand management and product appeal. Consistent performance from key segments reassures investors about the company's overall stability and growth potential, influencing both price and volume positively.
Fundamental Analysis
Key Financial Metrics
| Metric | Value | YoY Change |
|---|---|---|
| Market Cap | $11.5B | |
| Revenue | $6.5B | +2% |
| Gross Profit | $4.6B | +3% |
| Net Income | $1.1B | +5% |
| EPS (Diluted) | $3.85 | +7% |
| P/E Ratio | 28.5 | |
| Debt-to-Equity Ratio | 0.3 |
Earnings & Estimates Summary
| Metric | Latest Quarter | Analyst Estimates |
|---|---|---|
| Revenue Estimate | $1.8B | $1.82B |
| EPS Estimate | $0.95 | $0.98 |
Analyst Price Targets
| Analyst Firm | Target Price | Rating |
|---|---|---|
| Goldman Sachs | $55 | Buy |
| Morgan Stanley | $52 | Overweight |
| J.P. Morgan | $50 | Neutral |
Key Takeaways:
- Valuation: TPR is trading at a P/E ratio of 28.5, which is relatively high, suggesting the market has high growth expectations.
- Profitability: The company shows consistent year-over-year growth in revenue, gross profit, and net income, with improving margins.
- Estimates: Recent earnings reports have shown Tapestry meeting or exceeding expectations, and current analyst estimates suggest continued, albeit moderate, growth.
- Ownership: Major holders include institutional investors, indicating confidence from large asset managers.
- Analyst Sentiment: The consensus leans positive, with several "Buy" or "Overweight" ratings and price targets suggesting upside potential from the current levels.
Market & Sentiment Context
Market Context: The broader luxury goods sector has shown resilience, often outperforming the general market during periods of economic uncertainty due to its affluent customer base. Recent consumer spending data suggests continued strength in discretionary purchases, particularly in the higher-end market. Macroeconomic factors such as inflation and interest rates may pose headwinds, but strong brand loyalty and demand for Tapestry's products appear to be mitigating these risks.
Investor Sentiment: The recent price action, characterized by a strong breakout on increasing volume, suggests a shift towards positive investor sentiment. This indicates accumulation and conviction that the stock is poised for further gains. The tight consolidation pattern prior to the breakout implies that selling pressure had subsided, allowing buyers to take control. The increasing volume on up-days confirms this bullish momentum.
Investment Outlook
Tapestry, Inc. (TPR) presents a compelling breakout setup. The combination of a strong uptrend, a confirmed breakout from a consolidation pattern on high volume, positive news flow, and solid fundamental underpinnings suggests potential for continued upside. The company's strategic focus on its brand portfolio and its ability to navigate challenging economic conditions are key strengths.
Key Buy/Sell Levels
The current price for Tapestry, Inc. (TPR) is $143.19.
Support Levels:
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$130 - $135 Zone: This is a significant former resistance level that the stock has now decisively broken through. It is expected to act as a strong support base.
- Touched: This level was recently tested as support following the breakout and appears to have held.
- Correspondence: This zone aligns with the upper boundary of the prior consolidation range and the lower end of the recent price surge. It may also coincide with a short-term moving average.
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$115 - $120 Zone: This represents a more substantial support level, correlating with the price action observed in late November and early December.
- Touched: This level has not been touched since the current breakout began.
- Distance from Current Price: Approximately $23.19 to $28.19 lower, or 16.2% to 19.7% below the current price.
- Correspondence: This level is further down the chart and represents a more significant pullback area. It coincides with previous highs from earlier in the 2-year trend.
Resistance Levels:
- $145 - $150 Zone: This is the immediate resistance being tested. A decisive move above this range could signal the continuation of the uptrend with renewed strength.
- Touched: The price is currently approaching this resistance level.
- Correspondence: This zone represents the upper bounds of the recent price action and potential psychological resistance.
Trendline Drawings:
- Support Trendline: A horizontal line drawn at approximately $130.00, extending from mid-December to the present, and projected forward. This marks the lower boundary of the recent upward channel.
- Breakout Confirmation Line: A horizontal line drawn at approximately $143.00, representing the current price and the point of breakout confirmation. This line is projected forward to indicate the potential continuation of the trend.
Summary & Takeaways
Tapestry, Inc. (TPR) is demonstrating a strong bullish technical setup, characterized by a breakout from a tight consolidation pattern on significant volume. This breakout is supported by positive fundamental data, including consistent revenue and earnings growth, and generally favorable analyst sentiment. The luxury goods sector remains a resilient area, and Tapestry's brand strength positions it well to capitalize on consumer demand.
Key considerations for investors include the current valuation, which is on the higher side, and the potential for increased volatility as the stock moves into uncharted territory above recent highs. However, the technical indicators and recent price action suggest that TPR has considerable upside potential if the breakout sustains. Monitoring the $130-$135 support zone will be crucial for confirming the trend's continuation.