RL - Ralph Lauren gains after landing bull rating from BofA

Bank of America upgraded Ralph Lauren ( NYSE: RL ) to a Buy rating to reflect the firm's confidence in the strong revenue trends continuing for the apparel giant due to the brand’s global diversification and management's ability to pull cost levers in the choppy environment.

Of note, analyst Christopher Nardone and team think Ralph Lauren ( RL ) management has baked in an appropriate level of cautiousness on the U.S. value channel and European wholesale business into its outlook.

"We expect the efforts the company has already made to clean up its N.A. business will be a key differentiator compared to other vendors this year as retail brands continue to navigate a promotional retail environment. We expect RL’s brand elevation strategy will continue and that AUR and market share gains will drive consistent revenue growth.'

BofA also has  confidence that RL is on track to hit its medium-term operating margin target of 15% by F25.  The firm hiked EPS estimates for FY23-FY24 to reflect the recent earnings beat and stronger operating margin forecast.

BofA assigned a price objective of $145 to Ralph Lauren ( RL ), which works out to 9X EV/EBITDA estimates.

Shares of Ralph Lauren ( RL ) rose 2.33% in premarket trading.

Read about Ralph Lauren's earnings beat last week.

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