JP Morgan Maintains Overweight on Ralph Lauren, Raises PT to $406

JP Morgan Maintains Overweight on Ralph Lauren, Raises PT to $406

JP Morgan has recently maintained its Overweight rating on Ralph Lauren (RL), while raising its price target to $406. This move reflects the firm's optimism about Ralph Lauren's ongoing global strength, particularly its performance in the first quarter of this year. The increase in the price target is based on the strong financial results reported by the company, which exceeded market expectations [1].

The financial analyst firm has also raised its estimates for both Q1 and full-year earnings per share beyond the consensus on Wall Street. This positive outlook is supported by Ralph Lauren's robust revenue growth and strong performance across various geographies and channels. The company reported a 10% increase in revenue during Q4, with a full-year revenue growth of 8%. Additionally, adjusted operating profits grew by 24%, surpassing expectations [1].

Ralph Lauren's direct-to-consumer businesses saw a record 5.9 million new consumers added, driven by younger, female, and less price-sensitive cohorts. The company's social media presence has also grown significantly, with followers increasing by low double digits to surpass 65 million [1].

JP Morgan's new price target of $406 is higher than the average one-year price target of $317.23 set by 15 analysts, with a high estimate of $384.00 and a low estimate of $205.00. The average target implies an upside of 10.03% from the current price of $288.31 [1].

Despite the positive outlook, Ralph Lauren faces several challenges. The company remains cautious about the second half of fiscal '26 due to potential macroeconomic challenges, particularly in North America. Additionally, the company plans to exit about 90 department store doors in fiscal '26, which could impact its wholesale revenue growth. Tariffs and inflationary pressures are expected to be headwinds, particularly affecting gross margins in the second half of the year [1].

References:
[1] https://www.gurufocus.com/news/2996594/wells-fargo-boosts-ralph-lauren-rl-price-target-amid-strong-performance-rl-stock-news