Growing international market share should lift Ralph Lauren ‘s revenue growth, according to Raymond James. The firm initiated the stock with an outperform rating and a price target of $135 per share. This implies 20% upside from Thursday closing price of $112.24. Shares of the apparel company have been volatile this year, managing only a 6.2% gain in that time, while the S & P 500 is up 12.8%. RL YTD mountain RL ytd chart Analyst Rick Patel thinks that Ralph Lauren is trading below fair value, creating a buying opportunity for investors. “We like the setup where expectations have come down (stock -7% in last three months), estimates appear to signal a low bar (especially in North America and Wholesale), and valuation is attractive, in our view, given a [price-to-earnings ratio] of ~11x,” Patel wrote. The analyst also cited Ralph Lauren’s “increasing discipline with cost savings” as a driver behind improving margins. Growing average item selling prices and unit volume from international markets such as Asia should also serve to push Ralph Lauren’s revenue growth higher, Patel added. “Over the past few years through COVID, RL has worked to create a stronger foundation to generate growth from a healthier base. This has entailed elevating its iconic brand, right-sizing its wholesale distribution, fortifying its digital capabilities, and right-sizing inventory,” he wrote. — Michael Bloom contributed to this report
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