What happened
Ralph Lauren (RL -0.87%) shareholders beat the S&P 500 this week as shares rose 11% through Thursday trading compared to a 5% surge in the broader market, according to data provided by S&P Global Market Intelligence. The apparel specialist is now in positive territory so far in 2022, compared to a 7% drop in the S&P 500.
Shares jumped due to rising enthusiasm on Wall Street about its growth prospects.
So what
An analyst at J.P. Morgan upgraded the stock on Thursday and said shares could reach as high as $142 each within the next year. Hitting that mark would represent a new 52-week high for the stock. The Wall Street firm believes investors overreacted to concerns about slowing growth in the key European market, creating an attractive purchase price for this retailer.
Now what
Due to its focus on consumer discretionary products like apparel, Ralph Lauren's business is sensitive to changes in spending patterns, whether those shifts are sparked by geopolitical strife or economic slowdowns.
Image source: Getty Images.
Yet the company's last earnings update demonstrated that it had positive momentum at least through early February. CEO Patrice Louvet and his team boosted their short-term outlook, in fact, after each of Ralph Lauren's geographic regions notched double-digit sales gains.
Investors will be looking for signs of slowing gains over the next few quarters, either from price sensitivity in the U.S. market, or from supply chain disruptions in Europe. The bigger picture seems bright, though, for Ralph Lauren, as its luxury lifestyle brands resonate with shoppers. The stock's long-term trajectory ultimately depends on the chain's continued success on that front.
