Ralph Lauren shares have been upgraded by Guggenheim to a Buy rating with a forecast of a 45% upside. The apparel company’s strong fundamentals and promising long-term growth outlook are said to be the reasons behind this upgrade. Analyst Robert Drbul highlights Ralph Lauren’s solid balance sheet and attractive valuation as factors contributing to the positive outlook.
The stock’s recent underperformance compared to the S&P 500 has provided a favorable entry point for investors. Ralph Lauren shares have climbed nearly 8% since the beginning of the year. Drbul expects the company’s earnings to benefit from various cyclical tailwinds and has raised his estimates for the next two years.
For the fiscal year 2024, Drbul anticipates adjusted earnings per share of $9.50, and for 2025, he expects it to reach $10.75. These figures surpass Wall Street consensus and represent an increase from the previous estimates of $9.15 and $10.35 per share, respectively.
Drbul’s revised view takes into account the potential for better-than-expected gross margins in 2024 and 2025. Factors such as clean inventories, lower freight expenses, and reduced cotton prices are likely to contribute to this improvement. The analyst believes that Ralph Lauren’s management is making significant progress in attracting new customers and elevating the brand. He also commends the company for taking appropriate steps to drive long-term growth across all channels and geographies.
Ralph Lauren is experiencing positive momentum, and Guggenheim’s upgrade reflects confidence in the company’s future performance. With an anticipated 45% upside from the current stock price, investors may find this an appealing opportunity.
This news was originally reported by CNBC’s Michael Bloom.
