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Buy Ralph Lauren in a challenging retail environment, Bank of America says. Analyst Christopher Nardone upgraded the apparel stock to buy from neutral, and raised his price target, saying the brand can pull away from its peers as retailers deal with a promotional backdrop. “We are upgrading Ralph Lauren (RL) to Buy to reflect our confidence in strong revenue trends continuing given the brand’s global diversification and management’s ability to pull cost levers in this choppy environment (the new norm),” Nardone wrote in a Monday note. “We think management has baked in an appropriate level of cautiousness on the US value channel and European wholesale business 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,” Nardone wrote. Ralph Lauren shares have gained about 12% to start off 2023. The stock outperformed the S & P 500 in 2022, losing 11%, as the broader index fell 19%. Still, the analyst’s $145 price target, raised from $130 previously, suggests shares can rise another 22% from Friday’s closing price. The stock added more than 2% in Monday premarket trading. In recent years, Ralph Lauren reduced the number of lower quality partners, and leaned more into its direct-to-consumer strategy, as it overhauled its North America business, according to the note. The analyst approved of these changes, saying the moves will help Ralph Lauren distinguish itself from competitors. “We expect RL’s brand elevation strategy will continue and that AUR and market share gains will drive consistent revenue growth,” Nardone wrote. —CNBC’s Michael Bloom contributed to this report.
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