Tom Nikic, an analyst from Needham, has initiated a new Buy rating on Ralph Lauren (RL).
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Tom Nikic has given his Buy rating due to a combination of factors suggesting strong growth potential for Ralph Lauren. The company is adeptly executing its strategy to enhance the brand’s prestige, improve pricing, and expand margins. Ralph Lauren has consistently achieved year-over-year growth in Average Unit Retail, indicating successful pricing strategies. Additionally, while unit volumes were previously a challenge, they are now increasing alongside net pricing improvements.
Furthermore, although investments in brand elevation have somewhat limited EBIT margin expansion, there is potential for expense leverage as SG&A needs diminish. This balanced approach is expected to drive earnings per share growth in the teens, which Nikic believes will lead to continued stock price appreciation as earnings grow robustly.
In another report released on February 7, J.P. Morgan also maintained a Buy rating on the stock with a $285.00 price target.