UPDATE: Morgan Stanley Assumes Coverage and Downgrades Ralph Lauren
In a report published Thursday, Morgan Stanley analyst Jay Sole assumed coverage on Ralph Lauren (NYSE: RL) at Equal-weight from Overweight, with a NA price target.
According to the report, RL meeting market EPS expectations likely requires uncertain China and accessories growth, introducing a new element of EPS risk.
“Our bull case says China's huge men's market is ideally suited for the world's best men's brand and the accessories strategy is making steady progress,” the report noted. “These growth prospects justify a higher P/E. Our bear view is RL's old China licensee's brand mismanagement will take a decade to undo and RL lacks the appropriate brand position to compete in accessories. A lower, maturing business-type P/E is right.”
RL closed Wednesday at $165.58 with shares trading down at 1.46 percent.
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