Coach parent Tapestry Inc (NYSE:TPR) has been downgraded by Bank of America to ‘Neutral,’ with the bank citing limited upside following a 66% surge in the stock so far this year.
While analysts at BofA maintained confidence in the growth momentum at the company’s flagship Coach brand, they said the recent rally has pushed shares near fair value.
“The 66% YTD surge in the stock price … leaves the shares close to fair value, in our view,” analysts wrote in a note.
Tapestry stock fell around 2.4% on Tuesday morning and is now trading near the top of its 10-year valuation range, with a forward price-to-earnings multiple of about 20x, up from its historical average of 13x, according to the report.
The bank expects Tapestry to issue fiscal 2026 guidance calling for mid-single-digit sales growth and flat margins, reflecting near-term pressure from tariffs that are expected to weigh on gross margins by 60 basis points.
Tapestry has laid out mitigation strategies to offset the impact of new tariffs, but BofA noted that some of those efforts will take time. “At an average tariff of 20%, TPR will speed up mitigation; but a further 60bp of pressure implies a 3% EPS headwind,” analysts noted.
Despite the downgrade, BofA expects a strong fourth quarter for Tapestry, with upbeat commentary on Coach’s performance and potential upside to fiscal 2026 estimates.