RL - Ralph Lauren rallies after JPMorgan points to revenue recovery across brands

JPMorgan upgraded Ralph Lauren Corporation (NYSE:RL) to an Overweight rating from Neutral after pointing to attractive valuation with shares trading at 6X the firm's 2023 EBITDA or ~25% below the company's prepandemic multiple. Analyst Matthew Boss said the macro-driven pullback provides an opportunity to own a multi-year mid-teens margin profile with reset distribution model exiting the pandemic. A three-pronged revenue recovery opportunity is called out spread across Polo (refined casual), Lauren (self-help) and luxury (reopen). Ralph Lauren's $1.4B net cash on the balance sheet is also highlighted. Boss on the RL numbers: "Putting the pieces together, our consolidated 4Q22 revenue growth of +13.5% y/y reported matches mgmt’s +13-14% guide w/ potential conservatism built into N/A and Europe noting recent fieldwork pointing to above plan N/A trends and lateral peer commentary citing limited Western European impact to-date. On FY23, we model +3.1% revenue growth or +5% 'core' growth adjusted for ~200bps

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Ralph Lauren rallies after JPMorgan points to revenue recovery across brands