On Thursday, Wells Fargo (NYSE:WFC) reiterated its Overweight rating and $60.00 price target for Tapestry Inc. (NYSE:TPR), despite concerns surrounding the potential Federal Trade Commission (FTC) intervention in its merger with Capri Holdings (NYSE:CPRI). The FTC is reportedly considering an antitrust lawsuit to prevent the merger, but a final decision has yet to be made. The regulatory body is expected to meet this week and a subsequent vote on the merger is anticipated.
Tapestry, which has recently received regulatory approvals from the European Union, Japan, and China, is now awaiting the decision of U.S. regulators, the last hurdle to completing the deal. The company's stock has experienced a decline of over 15% since the beginning of April, as media reports about the FTC's possible action began to circulate. Despite this, Tapestry's management has expressed confidence that the merger will be approved.
Wells Fargo's analyst highlighted that Tapestry's stock still has potential for an increase in value in both scenarios—whether the deal is finalized or not. If the merger is consummated, the analyst predicts a stock price range of $60 to $75. Conversely, if the deal does not go through, the stock is still expected to see an upside, with a price target ranging from $45 to $50.
InvestingPro Insights
As investors weigh the potential outcomes of Tapestry Inc.'s merger situation, real-time data from InvestingPro provides a clear picture of the company's financial health and market position. Tapestry's market capitalization stands at a robust $9.37 billion, and it boasts an attractive P/E ratio of 10.14, signaling that the stock may be undervalued relative to its earnings. Notably, the company's gross profit margin impressively reaches 72.28%, reflecting its strong operational efficiency.
InvestingPro Tips highlight that Tapestry has not only raised its dividend for 3 consecutive years but has also maintained dividend payments for 16 consecutive years, demonstrating a commitment to shareholder returns. Additionally, the company's stock is currently in oversold territory according to the RSI, which could suggest a potential rebound in the near future. For investors seeking more in-depth analysis and additional tips, there are 9 more insights available on InvestingPro, which can be accessed with a special offer using coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
These financial metrics and expert tips provide a broader context for Wells Fargo's optimistic assessment of Tapestry's stock, suggesting that the company is well-positioned to navigate the challenges ahead, whether or not the merger with Capri Holdings proceeds.
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