Bank of America improves Ralph Lauren on good revenue trends


Bank of America upgraded Ralph Lauren (NYSE:RL) to a “buy” recommendation (from “neutral”) and increased their price target for the company to $145.00 (from $130.00) due to the retailer’s positive revenue trends. Bank of America upped F23E/F24E EPS by 6%/10% to $8.06/$9.50 as a result of higher operating margin projections.

In order to increase the company’s long-term profitability, the management has restructured its North American franchise over the past few years by reducing the number of dilutive, lower-quality partners and focusing more on direct-to-consumer sales. As retail businesses continue to negotiate a promotional retail environment, analysts anticipate management’s efforts to be a major differentiator compared to other vendors in 2018.

In a note, they stated, “We believe that management has included an appropriate level of caution regarding the US value channel and European wholesale in its view and are confident that the firm remains on track to reach its medium-term operating margin objective of 15% ccy by F25.”

RL shares are up 2.14 percent in pre-market trade on Monday.

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