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RL

Ralph Lauren

$96.15

-3.99 (-3.98%)

11:13
12/13/17
12/13
11:13
12/13/17
11:13

Ralph Lauren falls after Bofa/Merrill downgrade cites 'dimming' margin story

Shares of Ralph Lauren (RL) are sliding after a Bank of America Merrill Lynch analyst downgraded the stock to Underperform from Neutral. DOWNGRADE: BofA/Merrill analyst Heather Balsky downgraded Ralph Lauren to Underperform and cut her price target to $80 from $100. Balsky said the margin story is "dimming" and brand demand is "still not bright." The analyst is forecasting negative sales growth through fiscal year 2019 and thinks margin story has passed as management focuses on sales catalysts, including a ramp in marketing and investment as well as ecommerce strategies and international expansion. Balsky said Ralph needs to rebuild its image to attract younger consumers, which is difficult to execute as apparel demand remains weak, the retail environment stays highly competitive and promotional and consumers become less brand-loyal. The analyst sees downside risk to sales growth if management announces more distribution cleanup, departure from additional brands, or further withdrawal in ecommerce discounting. Balsky also added that the company's revenues are estimated to be roughly 40% wholesale globally and 50% in North America in fiscal year 2018, which may impede Ralph's turnaround, especially as department stores manage inventory tightly. GUIDANCE: In its second quarter earnings announcement on November 2, Ralph said the company expects third quarter net revenue to be down 6% to 8% and operating margin to be down 50 to 70 basis points, both excluding the impact of foreign currency. For fiscal year 2018, the company expects net revenue to decrease 8% to 9%, excluding the impact of foreign currency. Based on the first half performance, Ralph expects operating margin for fiscal year 2018 to be 9.5% to 10.5%, excluding the impact of foreign currency. The company added, "We expect capital expenditures of approximately $225M for fiscal 2018, lower than our previous guidance of $300M, as we shift capital investments behind consumer-facing initiatives that have demonstrated a proof of concept and healthy rates of return." PRICE ACTION: Ralph Lauren dropped over 3.5%, or $3.52, to $96.62 in late morning trading.

RL Ralph Lauren
$96.15

-3.99 (-3.98%)

10/10/17
10/10/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. HSBC (HSBC) downgraded to Underperform from Neutral at Credit Suisse with analyst Sanjay Jain citing valuation. 2. Jabil Circuit (JBL) downgraded to Sell from Neutral at Goldman Sachs with analyst Mark Delaney saying street expectations, which assume Jabil's earnings grow double digits year-over-year for both of the next two years, are overly optimistic. 3. Carlyle Group (CG) downgraded to Neutral from Buy at Citi with analyst William Katz citing valuation with the shares up 60% year-to-date. 4. Eli Lilly (LLY) downgraded to Neutral from Outperform at Credit Suisse with analyst Vamil Divan saying the valuation looks full with the shares up 13% since mid-August. 5. Ralph Lauren (RL) downgraded to Sell from Hold at Miller Tabak. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
10/20/17
OTRG
10/20/17
UPGRADE
OTRG
Mixed
Ralph Lauren upgraded to Mixed from Negative at OTR Global
12/13/17
BOFA
12/13/17
DOWNGRADE
Target $80
BOFA
Underperform
Ralph Lauren downgraded to Underperform from Neutral at BofA/Merrill
BofA/Merrill analyst Heather Balsky downgraded Ralph Lauren to Underperform and cut its price target to $80 from $100. Balsky said the margin story is "dimming" and brand demand is "still not bright." The analyst is forecasting negative sales growth through FY19 and thinks margin story has passed as management focuses on sales catalysts, including a ramp in marketing and investment. Balsky said Ralph needs to rebuild its image to attract younger consumers, which is difficult to execute, and sees risk to the downside.
12/13/17
12/13/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. TiVo (TIVO) downgraded to Neutral from Buy at B. Riley FBR with analyst Eric Wold citing heightened concerns around the company's dispute with Comcast (CMCSA). 2. Accuray (ARAY) downgraded to Underweight from Neutral at JPMorgan with analyst Tycho Peterson saying he sees better risk/rewards elsewhere. 3. Ralph Lauren (RL) downgraded to Underperform from Neutral at BofA/Merrill analyst Heather Balsky saying the margin story is "dimming" and brand demand is "still not bright." 4. bluebird bio (BLUE) downgraded to Hold from Buy at Maxim with analyst Jason McCarthy saying the 20% spike in the stock price after the latest ASH data presentation gives the company a $9B valuation. 5. Public Storage (PSA) downgraded to Underweight from Equal Weight at Morgan Stanley with analyst Richard Hill saying he expects ongoing top line deceleration from a combination of declining occupancy and moderating rate growth along with limited near-term benefit from the company's development pipeline. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.

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