Capri Earnings: Deal Moving Forward Despite Uninspiring Results; Shares Attractive

Capri reported third-quarter fiscal 2024 sales and earnings that fell short of our expectations. The firm is not holding earnings calls or providing guidance as it awaits its sale to Tapestry. Although Capri’s recent results have been disappointing, we think the deal will close in 2024 at the original terms and therefore, we hold our fair value estimate at $57 per share. We view Capri’s shares as attractive at the current discount of about 18% to this price. Separately, we rate Tapestry’s shares as undervalued in relation to our $60 fair value estimate, which is based on a postmerger model. Led by Coach’s 6% sales growth, Tapestry surpassed our expectations in its end-December quarter.