On Wednesday, BMO Capital adjusted its outlook on shares of PVH Corp (NYSE:PVH), reducing the price target to $106 from the previous $119 while retaining a Market Perform rating on the stock. The adjustment came after PVH Corp announced a modest revenue exceedance, with EBIT margin gains attributed to a slightly improved SGA rate compared to market expectations, with gross margin aligning with projections.
North American sales performed better than international figures, with Europe presenting challenges, especially for the Tommy Hilfiger brand.
PVH Corp's third-quarter sales forecast is set lower than market predictions, with earnings per share (EPS) anticipated to notably fall short of expectations. However, the full-year EPS forecast has been increased due to favorable tax and foreign exchange considerations. The new price target of $106 reflects approximately 9 times the projected FY25 earnings per share.
The company's recent performance indicates a geographical disparity in sales, with North American markets showing resilience amidst international pressures. The upcoming earnings call, scheduled for Thursday, is expected to provide further details and explanations regarding the company's third-quarter guidance and the factors influencing the revised full-year EPS projections.
Investors and market watchers are looking towards the earnings call for additional insights into PVH Corp's strategy and expectations for the remainder of the fiscal year. The company's updated guidance and revised price target from BMO Capital suggest a cautious outlook for the near term, particularly concerning international sales and earnings potential.
PVH Corp's stock performance and future prospects remain a focal point for stakeholders as the apparel company navigates the current economic landscape, with particular attention paid to its international segments and brand performance. The market will continue to monitor PVH Corp's financial health and strategic direction following the forthcoming earnings discussion.
In other recent news, PVH Corp, the owner of Calvin Klein, reported better-than-expected earnings for the second quarter and raised its full-year guidance, despite a decline in revenue. The company posted adjusted earnings per share of $3.01, surpassing the analyst estimate of $2.29, with revenue at $2.07 billion, in line with analyst expectations but down 6% YoY. This strong earnings performance was driven by gross margin expansion, reduced sales to lower margin wholesale accounts, and lower product costs.
PVH's CEO, Stefan Larsson, attributed the successful quarter to the disciplined execution of the PVH+ Plan. For the full year 2024, PVH raised its adjusted EPS guidance to a range of $11.55 to $11.80, up from the previous forecast of $11.00 to $11.25, while maintaining its projected revenue decrease of 6% to 7% compared to 2023.
The improved outlook is partly due to a tax benefit resulting from the favorable settlement of a multi-year audit in an international jurisdiction, leading to a projected effective tax rate of approximately 16% for the full year, down from the previous guidance of about 20%.
Zac Coughlin, Chief Financial Officer, emphasized the company's commitment to driving efficiencies, maintaining cost discipline, and simplifying global operations in light of these recent developments.
InvestingPro Insights
Amidst the cautious outlook presented by BMO Capital, a deeper dive into PVH Corp's financial health using InvestingPro data may provide investors with a more nuanced understanding of the company's position. The company's market capitalization stands at $5.83 billion, with an attractive price-to-earnings (P/E) ratio of 9.23, which further adjusts to 8.08 when looking at the last twelve months as of Q1 2025.
This suggests that the stock may be undervalued, especially when considering PVH's impressive gross profit margin of 58.94% over the same period, highlighting its ability to maintain high levels of profitability.
InvestingPro Tips also shed light on strategic moves by management, such as aggressive share buybacks, signaling confidence in the company's value. Moreover, PVH's record of maintaining dividend payments for 54 consecutive years showcases its commitment to shareholder returns.
With analysts predicting profitability for the current year and liquid assets surpassing short-term obligations, PVH appears financially stable. These insights are complemented by a substantial number of additional tips available on InvestingPro, providing a more comprehensive analysis of PVH's financial outlook.
While the stock's price movements have been quite volatile, with a 1-year price total return of 33.47%, the current price is at 74.01% of its 52-week high. This volatility and the potential undervaluation present opportunities for investors who are willing to navigate the uncertainties of the international market. As stakeholders anticipate the upcoming earnings call, these InvestingPro metrics and tips could prove valuable in assessing PVH Corp's potential for recovery and growth.
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