On Tuesday, research firm CFRA adjusted its financial outlook on PVH Corp (NYSE:), a global apparel company. The company lowered its price target for the stock to $138 from its previous target of $159. Despite the reduction, CFRA maintained a Buy rating on the shares.
The decision to lower the price target comes after a reevaluation of the company’s future earnings potential. The new target is based on a multiple of 12.0 times CFRA’s earnings per share (EPS) estimate for fiscal 2025 (ending January), which is lower than the price-to-earnings (P/E) multiple ) PVH Corp’s five-year forward average of 13.1. X. Furthermore, the CFRA reduced the EPS estimate for the tax year 25 for PVH Corp from 1.75 to 11.50 dollars and has started an EPS estimate for the tax year 2026 equal to 12.25 dollars.
PVH Corp recently reported normalized fourth-quarter earnings of $3.72 per share compared to $2.38 in the same period last year, beating consensus estimates by $0.20. Revenue was reported at $2.49 billion, in line with estimates and $69 million above expectations. Specifically, direct-to-consumer revenues saw a year-over-year increase of 9%, while wholesale revenues saw a decline of 10%. Digital sales showed a modest 1% increase.
The quarterly performance also highlighted brand-specific growth, with Tommy Hilfiger’s revenue up 1% year-over-year and Calvin Klein’s revenue up 4%. PVH Corp’s gross margin for the quarter increased 440 basis points to 60.3%, driven by lower transportation costs, a favorable shift in the mix of regions and sales channels, as well as lower product costs.
Despite expressing disappointment with PVH Corp’s annual forecasts, the CFRA believes the market reaction in after-hours trading is excessive. The firm suggests that the company’s conservative guidance could allow future financial performance to exceed expectations, potentially leading to upward revisions in coming quarters. The CFRA also notes that, with the stock currently trading at approximately 10 times FY25 EPS guidance, there is a value opportunity for investors.
Insights on InvestingPro
As PVH Corp navigates a dynamic retail environment, real-time data from InvestingPro provides a deeper understanding of the company’s financial health and stock performance. With a market capitalization of approximately $6.38 billion and a P/E ratio of 10, PVH Corp presents itself as a potentially undervalued opportunity when considering its near-term earnings growth prospects. The company’s revenue in the trailing twelve months as of the third quarter of 2024 was $9.216 billion, with a gross profit margin of 56.99%, reflecting its ability to maintain profitability in challenging market conditions.
Tips from InvestingPro suggest that PVH Corp is expected to see net profit growth this year, and analysts are optimistic about the company’s profitability. Furthermore, the stock has seen significant price upside over the past six months, with a 6-month total price return of 85.89%, indicating strong investor confidence. These insights could be particularly relevant to investors seeking growth opportunities in the apparel sector. For those looking to explore further, InvestingPro offers 5 additional PVH Corp recommendations, which can be accessed with a special offer. Use the coupon code PRONEWS24 to get an additional 10% discount on the annual or biennial Pro and Pro+ subscription.
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