On Tuesday, Citi maintained its Neutral stance on Ralph Lauren (NYSE:RL) stock, keeping the price target fixed at $189.00. The financial firm anticipates Ralph Lauren's second-quarter earnings per share (EPS) to align with the consensus and slightly exceed the company's own guidance. Citi's estimate stands at $2.37, matching the consensus and above Ralph Lauren's guidance of $2.25 to $2.35.
The forecast by Citi suggests a modest increase in sales of 2.2%, which is slightly below the consensus of 2.7% but within the company's expected range of 1.4% to 2.4%. Analysts at Citi predict that North American wholesale sales will show sequential improvement, aided by timing shifts that negatively impacted the first quarter, although they still expect a downturn in that area. Continued weakness in the U.S. e-commerce sector is also anticipated, despite modeling a 1% increase in North American comparable store sales.
The outlook for Ralph Lauren in Europe is believed to be steady, with signs of stabilization in the UK market. China is expected to remain a strong point for the company, even in the face of broader economic concerns.
Citi also projects that Ralph Lauren's management will likely increase its annual guidance modestly by the amount of the second-quarter outperformance, which is estimated to be $0.07 at the midpoint. This adjustment would raise the guidance from approximately $10.85-$10.95 to about $10.92-$11.02, compared to a consensus expectation of $11.31.
Despite these positive indicators, Citi suggests that the heightened expectations already set for Ralph Lauren mean that even with the anticipated guidance raise, it may not be sufficient to significantly lift the stock price.
In other recent news, Ralph Lauren Corporation (NYSE:RL) has been the focus of various analyst adjustments. Wells Fargo maintained an Equal Weight rating on the company's shares but increased the price target from $195.00 to $205.00, citing a strong performance despite macroeconomic pressures. On the other hand, CFRA upgraded Ralph Lauren's stock rating from Sell to Hold and raised its price target from $160.00 to $171.00, reflecting the company's strong performance.
The company reported a 3% increase in total revenue and a 5% rise in retail comps for the first quarter of fiscal year 2025, exceeding expectations despite a 4% decline in North American revenue due to planned wholesale reductions. BMO Capital Markets maintained its underperform rating on Ralph Lauren shares with a steady price target of $113.00.
TD Cowen increased its price target for the company's shares to $208 from $193 while maintaining a Buy rating. Evercore ISI also continued its positive stance on Ralph Lauren, reiterating an Outperform rating and a $195.00 price target. These recent developments highlight the various perspectives from different analysts on Ralph Lauren's financial performance and outlook.
InvestingPro Insights
Ralph Lauren's financial metrics and market performance align well with Citi's analysis, offering additional context to the company's outlook. According to InvestingPro data, Ralph Lauren has demonstrated strong financial health and market performance. The company's revenue for the last twelve months as of Q1 2025 stood at $6.65 billion, with a revenue growth of 3.06%. This aligns with Citi's forecast of a modest 2.2% increase in sales.
The company's profitability is noteworthy, with a gross profit margin of 67.14% for the same period. This impressive figure supports one of the InvestingPro Tips, which highlights Ralph Lauren's "impressive gross profit margins." Additionally, the company's P/E ratio of 19.21 and adjusted P/E ratio of 17.91 for the last twelve months as of Q1 2025 suggest that the stock is trading at a reasonable valuation relative to its earnings.
Another InvestingPro Tip notes that Ralph Lauren "has maintained dividend payments for 22 consecutive years," indicating a strong commitment to shareholder returns. This is further supported by the company's dividend yield of 1.63% and a dividend growth of 10% in the last twelve months as of Q1 2025.
The stock's performance has been particularly strong, with a one-year price total return of 88.26% as of the latest data. This aligns with the InvestingPro Tip highlighting the "high return over the last year." Furthermore, the stock is trading at 98.05% of its 52-week high, which corresponds to another tip stating that it is "trading near 52-week high."
For investors seeking more comprehensive insights, InvestingPro offers 17 additional tips for Ralph Lauren, providing a deeper understanding of the company's financial position and market potential.
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