On Tuesday, CFRA research firm adjusted its financial outlook on PVH Corp (NYSE:PVH), a global apparel company. The firm lowered its price target on the stock to $138 from the 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 reassessment of the company's future earnings potential. The new target is based on a multiple of 12.0 times CFRA's fiscal year 2025 (ending January) earnings per share (EPS) estimate, which is below PVH Corp's five-year average forward price-to-earnings (P/E) multiple of 13.1x. Additionally, CFRA has reduced its FY 25 EPS estimate for PVH Corp by $1.75 to $11.50 and initiated a fiscal year 2026 EPS estimate of $12.25.
PVH Corp recently reported normalized earnings for the fourth quarter at $3.72 per share compared to $2.38 in the same period last year, surpassing consensus estimates by $0.20. Revenue was reported at $2.49 billion, in line with estimates and $69 million above expectations. Notably, direct-to-consumer revenue saw a year-over-year increase of 9%, while wholesale revenue experienced a 10% decline. Digital sales showed a modest increase of 1%.
The quarterly performance also highlighted brand-specific growth, with Tommy Hilfiger revenue up by 1% year-over-year and Calvin Klein revenue growing by 4%. PVH Corp's gross margin for the quarter expanded by 440 basis points to 60.3%, attributed to lower freight costs, a favorable shift in the mix of regions and sales channels, as well as reduced product costs.
Despite expressing disappointment with PVH Corp's full-year guidance, CFRA believes the market's reaction in after-hours trading to be excessive. The firm suggests that the company's conservative guidance might allow for future financial performance to exceed expectations, potentially leading to upward revisions in the coming quarters. CFRA also notes that with the stock currently trading at approximately 10 times the FY 25 EPS guidance, there lies a value opportunity for investors.
InvestingPro Insights
As PVH Corp navigates through 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 standing at a compelling 10, PVH Corp presents itself as a potentially undervalued opportunity when considering its near-term earnings growth prospects. The company's revenue for the last twelve months as of Q3 2024 was $9.216 billion, with a gross profit margin of 56.99%, reflecting its ability to maintain profitability amidst challenging market conditions.
InvestingPro Tips suggest that PVH Corp is expected to see net income growth this year, and analysts are optimistic about the company's profitability. Additionally, the stock has experienced a significant price uptick over the last six months, with a 6-month price total return of 85.89%, indicating strong investor confidence. These insights could be particularly relevant for investors looking for growth opportunities in the apparel sector. For those keen on exploring further, InvestingPro offers an additional 5 tips on PVH Corp, which could be accessed with a special offer. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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