On Monday, CFRA analyst Zachary Warring revised the rating for Ralph Lauren (NYSE:RL) from Sell to Hold, maintaining a price target of $219.00. The upgrade aligns with InvestingPro data showing Ralph Lauren’s "GREAT" financial health score and currently trading slightly below its Fair Value. The upgrade reflects the analyst’s perspective on the company’s operating margin and valuation after a recent decline in share price. Warring’s assessment is based on a forward price-to-earnings (P/E) multiple of 17.5 times the fiscal year 2026 (ending in March) earnings per share (EPS) estimate, which he believes is justified due to Ralph Lauren’s above-peer operating margin following improvements in operating efficiencies.
Warring has retained his EPS forecasts for both fiscal years 2025 and 2026 at $11.75 and $12.50, respectively. He notes that Ralph Lauren’s stock has experienced a 30% drop in under two months, primarily due to concerns over tariffs. The company maintains impressive gross profit margins of 68% and a strong return on equity of 28%, according to InvestingPro data. He points out that the company is in a stronger position to manage these challenges compared to many other U.S. retailers, given that less than half of its revenue comes from within the U.S.
For the fiscal year 2025, which ends in March, Warring anticipates that Ralph Lauren’s operating margin will significantly exceed pandemic levels, reaching 13.8% as a result of ongoing cost reduction efforts. Following the recent sell-off, the analyst now views the company’s valuation as fair and suggests that the stock could trade between 15 to 20 times earnings over the long term if Ralph Lauren can sustain these margin levels. With a PEG ratio of 0.71, InvestingPro analysis reveals the stock is trading at an attractive valuation relative to its growth prospects. Discover more insights and 10+ additional ProTips in the comprehensive Pro Research Report available for Ralph Lauren and 1,400+ other top stocks.
In other recent news, Ralph Lauren has been the focus of multiple analyst evaluations and company developments. UBS analysts reaffirmed their Buy rating on Ralph Lauren, maintaining a price target of $348, highlighting the company as a high-quality growth stock with potential for positive earnings per share (EPS) surprises. Needham analysts initiated coverage with a Buy rating and a $310 price target, noting Ralph Lauren’s consistent strategy execution and growth in Average Unit Retail (AUR). Meanwhile, Wells Fargo upgraded Ralph Lauren to Overweight, setting a new price target of $240, citing strong brand metrics and global reach as key factors.
Additionally, Ralph Lauren Corporation adjusted the compensation arrangement for executive Halide Alagoz, setting her annual base salary at a minimum of $1 million and her annual stock award target at $2 million starting from fiscal year 2026. This change aims to align executive interests with those of shareholders. UBS analyst Jay Sole also raised Ralph Lauren’s price target to $348, emphasizing the company’s transformational changes and undervaluation at 20 times the forecasted earnings for the second fiscal year.
These developments reflect a broader confidence in Ralph Lauren’s potential for growth and resilience amid industry pressures. Investors and analysts will likely continue to monitor these changes closely to assess their impact on Ralph Lauren’s strategic goals and financial outcomes.
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