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On Thursday, TD Cowen demonstrated a positive outlook on Ralph Lauren (NYSE:RL) shares, as the firm increased the price target to $308 from the previous $265, while maintaining a "Buy" rating on the stock. The adjustment reflects a recognition of the company’s robust performance and potential for continued growth. According to InvestingPro data, the stock has delivered an impressive 69.5% return over the past year, though current analysis suggests the stock is trading above its Fair Value.
John Kernan, an analyst at TD Cowen, noted Ralph Lauren’s strong two-year stacked comparable sales, which have been impressive across multiple global regions. The brand’s success in key categories such as handbags, women’s apparel, and outerwear, along with average unit retail (AUR) gains, were highlighted as significant factors contributing to this performance. The company maintains impressive gross profit margins of 68%, with InvestingPro data showing seven analysts have revised their earnings upward for the upcoming period.
The analyst also suggested that Ralph Lauren’s management might revise its guidance upward, as the current projections for a slowdown in quarters two through four appear overly cautious. This potential revision is based on the company’s recent achievements and the momentum it has gained in acquiring new customers. The company’s strong position is reflected in its "GREAT" Financial Health Score from InvestingPro, which offers 13 additional valuable insights about Ralph Lauren’s performance and outlook in its comprehensive Pro Research Report.
Furthermore, Kernan anticipates that the upcoming Fall Investor Day will shed light on Ralph Lauren’s growth and margin potential, which could surpass the current consensus expectations. This event is expected to provide investors with a clearer picture of the company’s strategic direction and long-term financial targets.
The price target hike by TD Cowen suggests a strong confidence in Ralph Lauren’s ability to continue its upward trajectory, potentially leading to a more optimistic investment outlook for the company’s stock.
In other recent news, Ralph Lauren reported its fourth-quarter earnings for fiscal year 2025, exceeding Wall Street expectations. The company achieved an earnings per share (EPS) of $2.27, surpassing the anticipated $2.04, and revenue of $1.7 billion, which was above the forecasted $1.64 billion. This performance was driven by a 10% increase in total company revenue and a 24% rise in adjusted operating profits, with strong contributions from international markets, particularly China. Analysts at Needham maintained a Buy rating on Ralph Lauren, setting a price target of $310, reflecting confidence in the company’s ability to generate double-digit EPS growth in the coming years. Ralph Lauren’s financial position remains robust with nearly $1 billion in net cash, and the company plans for low single-digit revenue growth in fiscal year 2026. The first quarter is expected to show high single-digit revenue growth, though the company anticipates a slowdown to low single-digit growth for the remainder of the year. Despite potential macroeconomic uncertainties, Ralph Lauren is optimistic about its strategic initiatives and brand elevation efforts, which are expected to continue driving growth.
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