TD Cowen analyst John Kernan maintained a Buy rating on Ralph Lauren (RL – Research Report) today and set a price target of $192.00.
John Kernan has assigned a Buy rating to Ralph Lauren’s stock due to a combination of positive performance indicators and strategic initiatives that suggest strong future growth. Ralph Lauren has exhibited a significant increase in same-store sales, with the third quarter showing a 9% rise, which Kernan identifies as the most impressive non-pandemic influenced growth since 2012. This uptick in direct-to-consumer sales, paired with ongoing improvements in average unit retail (AUR) prices, leads him to believe that the market’s earnings projections for fiscal years 2025 and 2026 are underestimating the company’s potential. He supports his optimistic stance by adjusting the price target to 17 times his above-consensus earnings per share estimate for FY25.
Further bolstering the Buy recommendation, Kernan points to Ralph Lauren’s “Next Great Chapter: Accelerate Plan,” which is delivering sustainable growth and effective customer acquisition, retention, and conversion. Strategic investments in marketing are paying off, with substantial gains in global brand impressions and the addition of 1.7 million new direct-to-consumer customers. The company’s focus on core product growth and expansion into high-growth categories, such as Women’s, Outerwear, handbags, and Home, is expected to drive further AUR increases. With the company’s management confident in achieving, if not exceeding, its mid-teens operating margin target (excluding foreign exchange impacts), and with a projected significant increase in free cash flow by FY24, Kernan’s outlook for Ralph Lauren is decidedly positive.
In another report released on February 5, UBS also maintained a Buy rating on the stock with a $190.00 price target.
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Ralph Lauren (RL) Company Description:
Ralph Lauren Corp. engages in the design, marketing and distribution of premium lifestyle products. The firm offers apparel, accessories, home furnishings, and other licensed product. It operates through the following segments: North America, Europe, and Asia. The North America segment consists of sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company’s wholesale and retail businesses in the U.S. and Canada, excluding Club Monaco. The Europe segment caters to sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company’s wholesale and retail businesses in Europe and the Middle East, excluding Club Monaco. The Asia segment covers the sales of Ralph Lauren branded apparel, accessories, home furnishings, and related products made through the Company’s wholesale and retail businesses in Asia, Australia, and New Zealand. The company was founded by Ralph Lauren in 1967 and is headquartered in New York, NY.
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