Ralph Lauren Earnings: Joyful Holiday Results Highlight Brand Strength; Shares Overvalued

Continuing its string of strong reports, Ralph Lauren delivered sales and earnings above our expectations for its fiscal third quarter ended December. We attribute this performance in a tough luxury market to the firm’s brand intangible asset, the source of our narrow moat rating. Given its momentum, we expect to lift our $155 fair value estimate by a mid-single-digit percentage. However, we regard the shares, up about 80% over the past year, as expensive.