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Ralph Lauren Steps Down as CEO to Make Room For Outside Talent

By Austin Angelo 

On September 30th, Ralph Lauren, the CEO of the corporation sharing his name; Ralph Lauren Corp (NYSE:RL), announced that he will step down from his post. Steffan Larsson, the President of Gap’s Old Navy Branch, will succeed Lauren. However, the company said that Ralph will continue to “actively drive the company’s vision and strategy” in his role as the company’s Executive Chairman and Chief Creative Officer. Two analysts following the stock weighed in after this announcement.

Yesterday, Piper Jaffray’s Erinn Murphy  maintained a Neutral rating for the stock with a price target of $116. Highlighting the need for the management transition, she said, “We believe this management transition was a tough decision but it needed to be done to usher in fresh outside talent; importantly, this could start to lessen historic concerns around corporate governance.” However, Murphy maintained some of her concerns around the long-term fundamentals of the company; these factors include “slowing wholesale growth, weakening DTC trends (e-com & store traffic) and pricing integrity.”

Overall, Erinn Murphy has a 36% success rate recommending stocks with an average loss of -3.6% per rating when measured over a one-year horizon and no benchmark.

Seperately, Michael Binetti from UBS upgraded Ralph Lauren to a Buy given the new CEO’s track record of quickly optimizing operations. Following the year-to-date drop of 44% in the stock, Binetti feels Ralph Lauren’s stock is “inexpensive.” However, he cut his price target for the stock to $128 from $133.

Michael Binetti has a 72% success rate recommending stocks with an average return of 17.7% per rating when measured over a one-year horizon and no benchmark.

Out of 7 analysts who have recently rated the stock on TipRanks, 4 have rated Ralph Lauren as a Buy and 3 have rated it as a Hold; none of the analysts have recommended to Sell the stock. Based on price targets set by these 7 analysts, the average 12-month price target for Ralph Lauren is $132.4, a 13.51% upside over current levels.