Goldman Sachs has expressed confidence in Ralph Lauren’s ability to navigate short-term challenges linked to tariffs, announcing an upgrade of the luxury fashion brand’s stock from neutral to buy. This change was supported by analyst Brooke Roach, who has also increased her 12-month price target to $286, up from the previous $280. This optimistic projection translates into a potential 30% increase from where the stock closed on Monday.
The backdrop of this decision includes rising tensions between the U.S. and several important trading partners, leading to the U.S. imposing tariffs on goods from countries like Mexico, Canada, and China. These nations have responded with their own duties on American products. Amidst this environment, Roach noted that Ralph Lauren appears to have a more limited exposure to immediate macroeconomic risks compared to its competitors. These risks include tariffs, a slowdown in department store performance, and concerns about the financial health of lower-income consumers.
Interestingly, a recent decline in Ralph Lauren’s stock value, which has dropped more than 18% this month, has created an appealing opportunity for investment. Before this downturn, Roach remained cautious due to high valuations. However, she now sees the decline as a chance to buy, especially as valuations across the apparel sector have retreated due to broader market uncertainty and volatility.
Roach points out that brands like Ralph Lauren, which exhibit ongoing momentum, are likely to perform well across different macroeconomic scenarios. This is crucial as there’s growing investor concern about consumer spending power. In line with her views, many analysts remain optimistic about Ralph Lauren’s prospects, with 12 out of 19 recommending it as a buy or a strong buy. The average price target set by analysts also suggests a potential upside of 33%.
