Ralph Lauren (RL) Buy Rating Reiterated at Goldman Sachs

Goldman Sachs maintained a Buy rating on Ralph Lauren (NYSE: RL) with a modified price target of $180.00 (from $185.00). Analyst Lindsay Drucker Mann thinks a bottom is in place.

"We reiterate our Buy rating and see the 4Q14 update marking a positive inflection for EPS revisions and stock performance. Headline guidance did disappoint, but this was driven by upfront spending on long-term projects, while underlying business momentum is accelerating," said Drucker Mann.

"Specifically: (1) US wholesale sales running at a robust near 10% pace – RL is gaining share at department stores through merchandising focus, more effective replenishment and marketing. (2) EU momentum accelerating ahead of our expectation – Double-digit growth is being driven by cyclical improvement and the completion of inventory draw-downs, suggesting recent strength has multi-quarter runway. (3) Underlying fundamental strength plus peak investment activity in FY15 gives us confidence in an FY16 margin improvement story. (4) 100 bps of sales upside could be worth $0.30 of EPS– Sales guidance of 6-8% looks conservative to us, as it implies a slowdown from the near 10% organic 4Q rate (ex-shipment timing, license take backs, and forex) and because RL should get incremental sales from store openings and stepped-up marketing in 2H15," she added.

For an analyst ratings summary and ratings history on Ralph Lauren click here. For more ratings news on Ralph Lauren click here.

Shares of Ralph Lauren closed at $148.81 yesterday.

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