Analyst Sees Ralph Lauren Stock Rally Falling Short

RL is up more than 15% since the start of the year

Deputy Editor
Jan 27, 2023 at 11:43 AM
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Ralph Lauren Corp (NYSE:RL) received a downgrade from BMO Capital to "underperform" from "market perform," though the firm also raised its price target by $4 to $100 -- still a hefty discount to current levels. The analyst in coverage cited worsening margins, noting that though foreign exchange improvements drove the stock to its recent positive price action, there's "worry the stock rally is overdone, particularly with growing North American profit pressures." 

At last glance, RL was down 1.3% at $122.59, and earlier traded as low as $118.32. The stock remains above all notable short- and long-term daily moving averages, however, including its 20-day trendline. Year-to-date, the equity is up 15.6%. 

It's also worth noting that though shorts have buying back their bearish bets over the past month, short interest still represents 9.9% of the stock's available float. It would take nearly one week to cover, at RL's average pace of trading. 

Those looking to bet on the equity's next moves could do so for a bargain right now. This is per RL's Schaeffer's Volatility Index (SVI) of 44% that sits in the relatively low 28th annual percentile. This implies options traders are pricing in low volatility expectations at the moment.

 

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