Cowen Likes Ralph Lauren On A Pullback Despite Looming Tariffs

Although the trade war still looms, with footwear and apparel companies expected to be particularly affected, one analyst says to buy on the pullback of Ralph Lauren Corp RL.

The Analyst

Cowen analyst John Kernan reiterates an Outperform rating with a $145 price target.

The Thesis

Ralph Lauren’s management remains confident in its progress towards its 2023 targets, but tariffs will likely drive sentiment in the near-term.

Kernan said in a note the stock is undervalued with potential for double-digit EPS growth and multiple expansion into 2021. The company reported a big fourth-quarter earnings beat on Tuesday that saw management announce a double-digit increase in the dividend added $600 million to its share repurchase program in 2020.

The analyst says Ralph Lauren’s assortment and consumer engagement continues to improve, with core styles and icons driving the business, and emerging categories like denim and outerwear outperforming.

Strength in Europe is also offsetting seasonal weakness in North America, he said, posting 11 percent sales growth due to distribution growth within existing wholesale partners and retail same-store sales growth of 5 percent.

Kernan says top-line and operational improvements from a multi phase transformation are expected to produce sales and margin expansion long term, and generate significant cash flow to support cash returns to shareholders in the form of dividend growth and share repurchase.

Price Action

Ralph Lauren's stock is up 1.5 percent Wednesday at $115.64 per share.

Related Links:

Calvin Klein Is Stronger Than The Street Thinks, UBS Says In Upgrade Of Parent Company PVH

Ralph Lauren Brand Turnaround Is Gaining Traction, JPMorgan Says

Posted In: CowenJohn KernanAnalyst ColorEarningsNewsReiterationAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.