Why Morgan Stanley Believes Ralph Lauren's New CEO Will Be 'Positive' For The Stock

• Shares of Ralph Lauren Corp RL have declined over 44 percent year-to-date, from the high of $186.23 achieved on December 30, 2014.
• Morgan Stanley’s Jay Sole has maintained an Equal-weight rating on the company.
• Ralph Lauren has named Stefan Larsson as the new CEO, an announcement that Sole believes would prove positive for the stock.

“Mr. Larsson is highly regarded and his skill set likely meshes well with those of other top RL leaders. Secondly, it removes an overhang by adding clarity around succession planning,” the Morgan Stanley report said.

Analyst Joe Sole believes that Larsson brings with him wide international retail experience, which would become an important asset for the company, given that international retail growth is likely to be the key to long-term EPS growth.

Sole also believes that “Mr. Larsson's product, merchandising, and marketing skills will complement those of Chris Peterson.” Peterson has been named the president of the company’s new global brand structure and SAP implementation.

“We essentially see Mr. Larsson as CEO and Mr. Peterson as COO. Bob Madore remains CFO,” the report mentioned, while adding that President and COO Jackwyn Nemerov is set to retire, but that the company “has a strong wholesale business bench.”

However, Mr. Ralph Lauren is not leaving the company. He will continue as the Executive Chairman and Chief Creative Officer, continuing to actively drive the company’s strategy and vision.

Sole also mentioned that while there appears to be limited upside to the medium-term consensus EPS and P/E expectations, the company has long-term potential, with strategic investments expected to drive EPS growth acceleration in 2HCY16 or 1HCY17.