Cantor initiates luxury at Buy

Cantor Fitzgerald initiates Coach (COH +1%) at Buy with a PT of $66 and Tiffany at Buy with a PT of $88.

Analyst Allegra Perry believes Coach's discounted valuation ("near a low-point since the financial crisis") offers a "compelling opportunity to enter a high quality luxury turnaround story ... [I]mproved trends in North America coupled with strong growth in international markets and the on-going share buyback program should help drive a return to double digit earnings growth from FY15E." And, COH is supported by a 6.3% FCF yield and a 2.4% dividend yield.

Regarding Tiffany, Perry thinks the retailer is "well positioned to continue gaining market share in one of the most fragmented and fastest growing segments within the luxury goods sector." Strong fundamentals and possible consideration as a takeover target "suggest a premium multiple."

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