Why This Ralph Lauren Analyst Is Turning Bullish

Shares of Ralph Lauren Corp RL rose in early trading on Monday after ending last week lower.

The company is witnessing strong revenues due to its global diversification and management’s ability to curtail costs, according to BofA Securities.

The Ralph Lauren Analyst: Christopher Nardone upgraded Ralph Lauren from Neutral to Buy while raising the price target from $130 to $145.

The Ralph Lauren Thesis: Over the last several years, Ralph Lauren has revamped the North America franchise and improved its long-term profitability “by reducing the number of dilutive, lower quality partners and leaning more into DTC,” Nardone said in the upgrade note.

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“We think management has baked in an appropriate level of cautiousness on the US value channel and European wholesale business into its outlook and have confidence that the company remains on track to hit its medium-term operating margin target of 15% ccy by F25,” he wrote.

The analyst raised BofA's earnings estimates for fiscal 2023 and 2024 by 6% to $8.06 per share and by 10% to $9.50 per share, respectively, to reflect the third-quarter beat and higher operating margins.

RL Price Action: Shares of Ralph Lauren were trading 1.63% higher to $120.14 Monday morning. 

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