Why 82% of Wall Street Recommends Holding Ralph Lauren


Sep. 28 2017, Updated 9:10 a.m. ET

Ralph Lauren upgraded by Credit Suisse

The New York–based Ralph (RL) is covered by 22 Wall Street analysts. The company is rated a 3.0 with 82% “hold,” 9% “buy,” and 9% “sell” recommendations. RBC Capital, Needham, and Atlantic Equities are among the group of brokerage houses that have rated the company a “hold.”

Credit Suisse recently upgraded Ralph Lauren from a “neutral” to an “outperform” rating, believing it could be the next turnaround story after the successes of Coach (COH) and Calvin Klein (PVH).

Analyst Guillaume Gauville identified Ralph Lauren in his list of “top premium/luxury turnaround picks.”

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He commented in a note on September 8, “We upgrade Ralph Lauren to Outperform (new TP $111 from $91): We believe the company is on track to return to meaningful growth and margin expansion from FY19. This follows significant changes to management, visible efforts to reinvigorate the brand/products, cleaning up distribution and rightsizing of the cost structure.”

Macquarie lifted targets on Ralph Lauren

On September 5, Macquarie lifted Ralph Lauren’s earnings forecast to $5.78 from $5.54, driven by the company’s lower SG&A spending. The company’s target price was also revised upward to $100 per share.

RL currently has been assigned an average price target of $89.28, which indicates an upside of ~1%.

Barclays initiates Ralph Lauren with an “underweight” rating

Barclays, however, lacked confidence in Ralph Lauren and initiated coverage with an “underweight” rating on September 20.

Analyst Chethan Mallela thinks the company’s management lacks visibility on its turnaround plans and an improvement in the key operating metrics might not be sufficient to generate upside. Mallela also initiated coverage on Coach. Read the next part of this series to learn about recent analyst actions on the company.

ETF investors looking to add exposure to Ralph Lauren can consider the PowerShares Russell Midcap Pure Value Portfolio (PXMV), which invests 1.1% of its portfolio in the company.


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