On Wednesday, BofA Securities updated its stance on PVH Corp (NYSE:PVH), the parent company of brands such as Tommy Hilfiger and Calvin Klein.
The firm's analyst revised the price target downward to $122 from the previous $156, while maintaining a Buy rating on the stock. This adjustment comes in response to PVH's forecast for fiscal year 2024, which included lower than anticipated earnings per share (EPS) and a decline in sales.
PVH Corp recently provided an earnings guidance for fiscal year 2024, projecting EPS to be between $10.75 and $11.00. This guidance also anticipates a sales decrease of 6-7% and stable operating margins.
Despite these figures falling short of expectations, the company's management has reaffirmed its target of achieving a 15% operating margin. However, the timeline to reach this goal has been extended by one to two years beyond the initial fiscal year 2025 target.
In light of the subdued outlook, particularly in the European market, BofA Securities has adjusted its estimates for PVH's first quarter and full fiscal year 2024 EPS. The new estimates stand at $2.16 for the first quarter and $10.80 for the year, marking a decrease of 16% and 13% respectively.
The revised price objective reflects not only the lowered earnings estimates but also a reduced enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple for 2024, which has been set at 8.5 times compared to the previous 9 times.
The reduction in the price target to $122 is also attributed to the broader, more uncertain macroeconomic environment.
While the analyst has lowered expectations, the Buy rating suggests a continued positive outlook on PVH Corp's shares, indicating that the current stock price has sufficiently factored in the reduced earnings forecast and potential market challenges.
InvestingPro Insights
As PVH Corp navigates a challenging fiscal outlook, real-time data from InvestingPro provides a deeper understanding of the company's financial health. With a market capitalization of $6.48 billion and a P/E ratio adjusted for the last twelve months as of Q4 2024 at 9.22, PVH shows a valuation that might be attractive to investors looking for potentially undervalued stocks. Additionally, the company's revenue growth has been modest at 2.14% over the last twelve months, indicating stability in the face of economic headwinds.
InvestingPro Tips highlight that management's aggressive share buybacks could be a sign of confidence in the company's intrinsic value. Moreover, the stock's RSI suggests it is in oversold territory, which might appeal to value investors looking for entry points. For those who prioritize dividend consistency, PVH has maintained dividend payments for 54 consecutive years, showcasing a commitment to returning value to shareholders.
For readers interested in further analysis and tips, InvestingPro offers additional insights on PVH Corp. There are currently six more InvestingPro Tips available, which can provide a more nuanced investment perspective. To access these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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