UBS Cuts Ralph Lauren (RL) Price Target and EPS Estimates

NEW YORK (TheStreet) -- UBS lowered its price target and estimated earnings per share for Ralph Lauren (RL) Friday.

Ralph Lauren gained 2.3% to $155.75.

The firm set a price target of $185 for the apparel company, down from its previous $195. The firm also cut its fourth-quarter EPS to $1.60 from $1.81. The EPX cut is due to the company's revised guidance, "offset by heavy promos & slightly negative GM mix shifts."

UBS also cut its full-year 2015 EPS to $9.21 from $9.83.

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Separately, TheStreet Ratings team rates RALPH LAUREN CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate RALPH LAUREN CORP (RL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • RL's revenue growth trails the industry average of 16.7%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • RL's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, RL has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
  • RALPH LAUREN CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RALPH LAUREN CORP increased its bottom line by earning $8.00 versus $7.13 in the prior year. This year, the market expects an improvement in earnings ($8.50 versus $8.00).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market on the basis of return on equity, RALPH LAUREN CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: RL Ratings Report

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