What's Causing Coach's Downward Trend?

September has seen Coach (COH) (43.93), take the investment community by storm. The company conducted an investor day, and presented at two separate consumer equity conferences. All this buzz could not have been generated at a better time for the stock which has been on the skids since hitting a high of $54 in April.

I listened to COH's presentation at the Oppenheimer Consumer Conference taking occurring this week, and I admit the company did not dissapoint. Demonstrating great growth for FY07 with 18% retail square footage growth, the company assured investors FY08 would see similar growth. This coupled with a projected 20% annual growth rate in handbag demand, the company's flagship product, should have given investors reasons to buy.

Wall Street's analysts from Bear Sterns (BSC,) and Goldman Sachs (GS) also added to the optimism following these investor presentations by coming out with outperform ratings on the stock, and price targets north of $50.

Despite all the optimism and positive commentary, the stock remains mired under $45. We are reaching COH's strong season as the holidays are approaching, and the company also pointed out in its presentation that it will be launching a new Legacy Concept store in Greenwich Village slated for October, so maybe there still remains a move in the stock. However, don't bet the ranch on it.

Take all the good news, and positive analyst coverage from this past week, and COH still remains in a downward trend. I think a major drag on the stock is the looming possibility of a recession in the U.S. A slowdown in consumer spending would hurt the company's largest market. This may be why investors continue to stand pat. All of the rosy projections, and optimistic growth aside, I would need to see this stock break its current downward trend before buying into all the good news.