NEW YORK (TheStreet) -- Shares of Michael Kors (KORS) closed slightly lower on Wednesday even as Morgan Stanley recommended that investors switch from Coach (COH) to the company.
"For investors looking to invest in the handbag industry, we would advocate switching out of COH into KORS, which at 10x FY17 EPS offers more compelling value in our view," the firm wrote in a note earlier today.
Morgan Stanley also downgraded Coach stock to "underweight" from "equal weight" with a $32 price target today.
The firm questions whether a sustainable turnaround is really occurring at the New York-based luxury handbag and accessories company.
"Our definition of a turnaround is sales growth with stable margins or stable sales with margin improvement, but COH has not delivered this yet," Morgan Stanley added.
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The firm has an "outperform" rating on shares of Michael Kors.
Coach stock closed down on heavy trading volume today. About 7.37 million of the company's shares changed hands today compared to its average volume of 3.89 million shares per day
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on Michael Kors stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels.
But the team also finds that net income has been generally deteriorating over time.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.