UPDATE: Citi Upgrades Ralph Lauren (RL) to Buy; 10 Reasons to Ride Stock Higher

(Updated - December 11, 2020 8:50 AM EST)

(updated to add analyst comments)

Citi analyst Paul Lejuez upgraded Ralph Lauren (NYSE: RL) from Neutral to Buy with a price target of $134 (from $75).

The analyst commented, "We are upgrading the stock from Neutral to Buy. We believe RL is making the right moves to upscale the brand while at the same time is positioned to cut a meaningful amount out of its expense base. With lean inventories helping GM in the near-term and expense cuts cushioning margins in the medium-term, we believe RL can significantly increase EPS in the coming years and exceed consensus forecasts."

Lejuez cited 10 reasons to ride the stock higher:

1. Conservative inventory management and big pullback in wholesale orders creates a favorable equation for future quarters
2. Markdown dollars (vendor allowance) situation a tailwind to GM
3. Permanent SG&A reductions
4. Opportunity to shed non-core assets (Club Monaco), which could add to EBIT
5. Weaker USD good for their int’l biz and US tourism once travel opens up
6. Balance sheet improving and cash return to shareholders likely to resume in the near future
7. Shift to DTC good for margins
8. Int’l (50% of F19 sales) was very healthy pre-pandemic.
9. Attracting a younger customer and investing in content online
10. AUR strategy is working

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 $103.85 yesterday.

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