Wells Fargo Resumes Ralph Lauren (RL) at Market Perform

Wells Fargo resumes coverage on Ralph Lauren (NYSE: RL) with a Market Perform rating and a valuation range of $96-$98.

Analyst Ike Boruchow commented, "We believe that Ralph Lauren continues to be a globally relevant brand with over 500 stores and 12,000 global wholesale doors, though recent macro challenges, management transitions and reorganizations have contributed to the stock’s decline of nearly 50% since its highs in late December 2014 (vs. SPX -2%). Although shares of RL have materially underperformed peers YTD and valuations are currently near multi-year lows, it is difficult for us to be more constructive on the stock today given a lack of visibility into future earnings. Specifically, following a decade of strong growth (driven by both organic growth and multiple geographic and product license acquisitions) RL has seen top-line performance begin to slow over the past 12 months--primarily in the U.S. (which represents nearly 70% of sales today) due to headwinds regarding tourism, department stores and general luxury weakness. While the company is in the process of making some meaningful changes to the model, including 1) rightsizing and increasing the quality of their distribution, 2) reducing the depth of inventory buys and 3) pulling back from discounting and promotional selling levels, we feel that many of these upcoming challenges are fairly appreciated by investors at this point. Net/net, we are resuming coverage on the sidelines with an expectation that numbers need to come down, while the risk/reward seems fairly balanced in the near term."

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 $96.92 yesterday.

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