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On Tuesday, CFRA analyst Zachary Warring downgraded Ralph Lauren (NYSE:RL) stock from Hold to Sell, maintaining a price target of $219.00. The downgrade comes despite Warring’s acknowledgment of Ralph Lauren’s improved operating metrics since 2019 and effective execution of its long-term strategic plan, which has resulted in impressive gross profit margins of 68.08%. The analyst has kept the earnings per share (EPS) estimates for fiscal years 2026 and 2027 steady at $11.75 and $12.50, respectively. According to InvestingPro, seven analysts have recently revised their earnings estimates upward for the upcoming period.
Ralph Lauren shares have seen a significant rise, nearly 60%, in a span of less than two months, reaching the higher end of its three-year range for forward price-to-earnings (P/E) ratios. Currently trading at $280.97, the stock has delivered an impressive 69.03% return over the past year. InvestingPro analysis indicates the stock is trading above its Fair Value, with technical indicators suggesting overbought conditions. This increase reflects high expectations from the market, betting on continued growth and margin expansion for the company.
Warring, however, expresses caution due to the current macroeconomic and geopolitical climates, which he believes offer no margin for error. This perspective has led to the decision to downgrade the stock rating based on valuation concerns.
The analyst notes that, while Ralph Lauren is performing well operationally, the broader market conditions present risks that could impact the company’s future performance. In light of these risks, Warring suggests that there may be other investment opportunities within the industry that offer a more favorable balance of potential rewards and risks.
Ralph Lauren’s stock price movement will continue to be watched closely by investors as they weigh the company’s strong performance against the cautious outlook provided by CFRA. The maintained price target of $219.00 is based on a forward P/E multiple of 17.5x, which is above the company’s three-year average. Despite valuation concerns, InvestingPro data shows Ralph Lauren maintains a "GREAT" Financial Health Score of 3.25, with strong cash flows and moderate debt levels. For deeper insights into Ralph Lauren’s valuation and financial health, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Ralph Lauren has reported expectations for its upcoming earnings, with Citi analysts projecting a fourth-quarter earnings per share (EPS) of $2.09, surpassing the consensus estimate of $2.02 and the company’s guidance of $1.85 to $1.95. This comes alongside an anticipated sales growth of 6.3%, exceeding the consensus of 4.9% and the company’s guidance of 3-5%. In response to these forecasts, Citi has raised its price target for Ralph Lauren to $250 while maintaining a Neutral rating. Meanwhile, CFRA has upgraded Ralph Lauren’s stock rating from Sell to Hold, with a price target of $219, highlighting the company’s operating margin improvements and valuation. Wells Fargo (NYSE:WFC) has also upgraded Ralph Lauren’s stock from Equal Weight to Overweight, setting a new price target of $240, citing the company’s strong brand metrics and global reach as significant factors. Additionally, Ralph Lauren has announced changes to the compensation arrangement for executive Halide Alagoz, setting her annual base salary at a minimum of $1 million and her annual stock award target value at $2 million starting from fiscal year 2026. These developments reflect Ralph Lauren’s strategic positioning and commitment to aligning executive interests with shareholder value.
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