S&P 500   4,577.11
DOW   35,368.47
QQQ   370.55
S&P 500   4,577.11
DOW   35,368.47
QQQ   370.55
S&P 500   4,577.11
DOW   35,368.47
QQQ   370.55
S&P 500   4,577.11
DOW   35,368.47
QQQ   370.55

Ralph Lauren (NYSE: RL) Has Room To Run Another 30%

Tuesday, January 19, 2021 | Sam Quirke
Ralph Lauren (NYSE: RL) Has Room To Run Another 30%With upwards of an 80% run since the start of November, shares of high-end fashion name Ralph Lauren (NYSE: RL) are acting more like a tech stock than a brick and mortar focused retailer in recent weeks. Indeed, over that timeframe they’ve easily outperformed the tech focused NASDAQ 100 index, which has only managed to tack on a paltry 5%.

The change in fortunes is a sign of the times, as COVID vaccines continue to be rolled out and investor sentiment shifts from COVID resilient stocks to COVID recovery stocks. This was the message from RBC late last week when they upgraded shares to Outperform from Sector Perform, pointing to the release of almost 12 months worth of pent up consumer demand acting as a major tailwind for the New York based company. In a note to clients, they added "with shares among our biggest laggards in 2020 we see Ralph Lauren as poised for outperformance into 2021 as EPS revisions move higher from margin enhancing activities including lean inventories, pivoting the brand towards direct, and expense management."

EPS Revisions

UBS struck a similar tone last week as well, as they also upped their rating on shares to Buy from Neutral, and outlined the main factors behind the decision; "we think stocks with these 3 criteria will shine this year: 1) will benefit from transformational changes which have been overlooked by the market due to its focus on the pandemic; 2) sell-side consensus 2021/2022 estimates are too low; and 3) underperformed in 2020. We believe these stocks will have upward EPS revision cycles lasting longer than expected which drive P/E expansion."

All this talk of upward EPS revisions is sure to have investors licking their chops, especially after their last earnings report in October had GAAP EPS surprisingly deep in the red and well below expectations. Since then, shares have gone from strength to strength, with this column also noting Goldman Sachs bullish two notch upgrade of shares last month, for reasons similar to those above.

After setting a post COVID high early last week, shares have cooled a little as they’ve come into contact with a fairly well formed downtrend that’s been waiting for them since January. Many investors who’ve caught the ride up so far will likely be thinking about taking some profits off the table, so don’t be surprised if this weakness continues into the new week. Indeed, if anything, this should be considered a great buying opportunity and make shares all the more attractive.

Longer Term Potential

Having been beaten down so much last year, shares are acting like a spring that’s been released as doomsday scenarios around COVID fail to come to pass. Along with the likes of restaurant stocks and travel names, high end fashion and apparel companies stand to do well in 2021 as Wall Street’s sentiment shifts away from high growth opportunities to recovery opportunities.

In the long run, 2020 could well be viewed as a great year for Ralph Lauren in hindsight, as it forced management to trim much of the fat that’s had shares trending down since 2013. Their Fiscal 2021 Strategic Realignment Plan is up and running, with both headcount and real estate cost reductions expected to yield savings well over the $200 million mark in the first year alone.

The inroads they’ve made into the development of their digital channels will also stand them well over the long run, and make them less vulnerable to any worsening of the current pandemic or arrival of a new one. As shares stabilize after the recent run and break through the resistance that they’re testing right now, investors can expect room to the upside of around 30%. This would put them above 2018’s levels, and at their highest in almost 7 years.

Ralph Lauren (NYSE: RL) Has Room To Run Another 30%

Ralph Lauren is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

Should you invest $1,000 in Ralph Lauren right now?

Before you consider Ralph Lauren, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Ralph Lauren wasn't on the list.

While Ralph Lauren currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Ralph Lauren (RL)2.9$112.31-2.2%2.45%20.99Buy$131.64
Compare These Stocks  Add These Stocks to My Watchlist 

Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2022. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information | RSS Feeds

© 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.