Ahead of the Bell: Analyst: 'Poppy' to help Coach

Coach Inc.'s new Poppy collection appears to be boosting results at its retail stores, an analyst said Monday as he raised his expectation for how high the handbag and accessories seller's shares could rise.

Todd Slater of Lazard Capital Markets said Coach seems to be pulling in younger customers with its new Poppy product assortment and is beginning to reap the benefits of its marketing and promotional efforts.

"While Poppy doesn't officially launch until Friday, June 26th, the collection has already generated a lot of media and customer buzz, thanks to smart marketing (bus ads, blogging, press interviews highlighting the Poppy strategy) and the fact that customers can pre-order the collection in stores and have it shipped free to their homes," Slater wrote in a client note.

Poppy also appeals to the budget-conscious shopper, the analyst added, as pricing starts at $198. Retailers at have been enduring a great deal of pressure as consumers curb their spending amid continued economic and job concerns.

For Coach to have such an immediate response to its new product indicates the retailer may be on the right track to turn around its lackluster performance. In April Coach said its third-quarter profit fell 29 percent on nearly flat sales.

The Poppy collection follows through with Coach's previously announced plan to lower prices 10 percent to 15 percent over the next fiscal year, which starts this month. The strategy includes offering half of its handbags _ about 70 different types _ for $200 to $300.

Slater increased the New York-based company's price target to $32 from $30. Coach shares closed Friday at $26.24.