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Bank of America upgraded Ralph Lauren (NYSE:RL) to a Buy rating (from Neutral) and raised their price target on the stock to $145.00 (from $130.00) as the retailer’s strong revenue trends boost confidence. Bank of America increased F23E/F24E EPS by 6%/10% to $8.06/$9.50 to reflect the 3Q beat and improved operating margin forecasts.
Over the last several years, the company’s management has overhauled its North America franchise to improve the long-term profitability of the business by reducing the number of dilutive, lower quality partners and leaning more into DTC. Analysts expect management’s efforts to be a key differentiator compared to other vendors this year as retail brands continue to navigate a promotional retail environment.
They wrote in a note, “We think management has baked in an appropriate level of cautiousness on the US value channel and European wholesale 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.”
Shares of RL are up 2.14% in pre-market trading on Monday.
