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On Friday, Deutsche Bank (ETR:DBKGn) resumed coverage on Ralph Lauren (NYSE:RL) shares, issuing a Buy rating and setting a price target of $343.00. The financial institution highlighted Ralph Lauren’s strong fundamentals and growth potential, noting the company’s ability to outperform in various aspects of its business. This optimistic outlook aligns with InvestingPro data showing 11 analysts revising their earnings estimates upward for the upcoming period, while the company maintains an impressive "GREAT" financial health score of 3.25.
Krisztina Katai, an analyst at Deutsche Bank, praised Ralph Lauren for its high-quality characteristics, including robust underlying fundamentals, effective pricing power, and significant untapped market potential. The analyst also pointed to the limited reliance on Chinese sourcing as a positive factor. Katai expressed confidence in Ralph Lauren’s ability to gain market share and align itself more closely with European luxury brands through strategic growth across different regions, channels, and product categories. This assessment is supported by the company’s impressive gross profit margin of 68.55% and healthy revenue growth of 6.75% over the last twelve months.
The report underlined the market’s potential undervaluation of Ralph Lauren’s transformational changes, distribution and sourcing model, and opportunities for margin expansion. The expectation of a positive earnings per share (EPS) revision cycle was anticipated to drive both estimates and valuation higher. However, InvestingPro’s Fair Value analysis suggests the stock is currently trading slightly above its intrinsic value, with the stock price hovering near its 52-week high of $289.33. Investors seeking deeper insights can access comprehensive valuation metrics and 15 additional ProTips through InvestingPro’s detailed research reports.
Ralph Lauren’s fourth-quarter results and first-quarter trends to date were cited as reasons for increased confidence in the company’s trajectory. The brand’s sound balance sheet, attractive free cash flow yield estimated at around 2.6% for fiscal year 2026, and a robust share buyback program were also mentioned as supportive factors for double-digit earnings growth.
The analyst concluded that despite recent price increases, Ralph Lauren’s valuation remains compelling at approximately 19 times their fiscal year 2027 estimated EPS, based on an estimated compound annual growth rate (CAGR) of around 11% over three years.
In other recent news, Ralph Lauren’s fourth-quarter earnings report has spurred several investment firms to adjust their price targets for the company. UBS increased its price target to $384, maintaining a Buy rating, due to strong direct-to-consumer sales growth and expectations of positive earnings per share surprises. BMO Capital Markets also raised its target to $205, citing Ralph Lauren’s performance surpassing quarterly expectations, though it maintained an Underperform rating. Jefferies adjusted its target to $328, noting the brand’s robust performance and stable trends despite macroeconomic concerns. JPMorgan raised its target to $355, maintaining an Overweight rating, highlighting Ralph Lauren’s continued revenue growth and lack of wholesale cancellations. TD Cowen increased its price target to $308, maintaining a Buy rating, based on the company’s strong sales and potential for upward guidance revisions. These recent developments reflect a generally positive outlook on Ralph Lauren’s financial trajectory and strategic initiatives.
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