We recently compiled a list of the Top 10 Luxury Stocks According to Analysts. In this article, we are going to take a look at where Ralph Lauren Corporation (NYSE:RL) stands against the other luxury stocks.
The luxury retail industry is facing significant challenges, with major brands like Burberry, Hugo Boss, and Gucci experiencing substantial drops in their profits. The decline in luxury sales, especially in Asia and the Americas, has been a major concern, with Burberry and Hugo Boss seeing notable decreases in their revenue. Other brands such as Richemont and Swatch have also reported significant downturns in sales, particularly in China. The overall luxury market index has seen a sharp decline, which indicates widespread struggles in the sector.
Luxury brands have traditionally relied heavily on Chinese consumers, who have contributed significantly to their growth. However, the slowing Chinese economy and a cautious consumer base have led to reduced spending on luxury goods. The economic slowdown in China is attributed to factors such as lower land sales, an aging population, and decreased exports.
Despite the challenges, some brands made significant strides such as the Italian high fashion women’s clothing and accessory brand, Miu Miu, which saw a nearly 60% growth last year and a 90% growth in the first quarter of this year. This helped its parent company, Prada Group, increase its sales as well.
The luxury market has historically bounced back from downturns, and many in the industry hope that the current challenges are temporary. However, the recent performance has reminded the sector that luxury items are not immune to economic challenges, and consumer demand can fluctuate based on economic conditions and consumer confidence. Nevertheless, luxury brands are comparatively less affected by the economic conditions as most of their purchases are made by a very small group of elite consumers. You can also read our article on Top 11 Luxury Clothing Stocks to Invest in Now, where we discussed luxury consumer behavior in detail.
Our Methodology
For this article, we made a list of nearly 20 luxury stocks with at least Moderate Buy ratings according to analysts and narrowed our list to 10 stocks with the highest average analyst price target, as of August 5. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds as of Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A man and woman in business attire walking down a street, bags of clothing in hand.
Ralph Lauren Corporation (NYSE:RL)
Average Price Target Upside as of August 5: 22.03%
Number of Hedge Fund Holders: 43
Ralph Lauren Corporation (NYSE:RL) is a renowned American fashion house and one of our top luxury stocks according to analysts. The company is a symbol of luxury and classic American aesthetics.
Ralph Lauren (NYSE:RL) has become a prominent global name in designing, marketing, and distributing high-end lifestyle products, including clothing, accessories, home decor, and fragrances. The company’s signature lines, like Polo Ralph Lauren and Ralph Lauren Collection, are known for luxury and refinement.
Ralph Lauren (NYSE:RL) has a Moderate Buy rating as per the consensus opinion of the 22 analysts that have covered it. As of August 5, the average price target of $195.00 represents an upside of 22.03% to the stock’s current price.
Ralph Lauren (NYSE:RL), a major player in the global apparel market, continues to show strong performance despite recent challenges. On July 25, TD Cowen analyst John Kernan lowered the price target on the stock to $196 from $202 and kept a Buy rating. This adjustment reflected broader concerns about the apparel sector in China, including policy risks and competitive pressures. Despite these challenges, the company exceeded profit expectations for the first quarter, driven by steady demand for its high-end denim and polo shirts, particularly in Europe and China.
Ralph Lauren’s (NYSE:RL) net revenue grew by 1% to $1.51 billion, surpassing analysts’ average expectation of 0.46%, according to LSEG data. The company reported earnings of $2.70 per share, higher than the anticipated $2.47.
Ralph Lauren’s (NYSE:RL) sales in Europe and Asia increased compared to the previous year, a positive sign amid weaker earnings reported by other major European luxury brands like LVMH, Hugo Boss, Burberry, and Kering. Furthermore, the company has reaffirmed its forecast for low-single-digit revenue growth for the fiscal year 2025, indicating a stable outlook.
According to Insider Monkey’s database, 43 hedge funds held stakes in Ralph Lauren (NYSE:RL) in the first quarter, with positions worth $871.800 million. With 822,521 shares of the company, valued at $154.436 million, Marshall Wace LLP is the most dominant shareholder of the company as of Q1.
Overall RL ranks 9th on our list of the best luxury stocks to buy. You can visit Top 10 Luxury Stocks According to Analysts to see the other luxury stocks that are on hedge funds’ radar. While we acknowledge the potential of RL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
