On Tuesday, JPMorgan (NYSE:JPM) adjusted its financial outlook for fashion conglomerate PVH Corp (NYSE:PVH), operator of brands such as Calvin Klein and Tommy Hilfiger. The firm's analyst set a new price target for PVH Corp shares at $146.00, down from the previous target of $165.00. Despite this reduction, the analyst maintained an Overweight rating on the stock.
The revision follows PVH Corp's initial fiscal year 2024 earnings per share (EPS) guidance, which came in below market consensus. The company forecasted an EPS of $10.75 to $11.00, a figure approximately 9% lower than the consensus of $11.99. This projection is based on an anticipated revenue decline of 6-7%, which adjusts to a 3-4% decrease when excluding the impact of the Heritage Brands sale and the additional week in the fiscal calendar.
PVH Corp's management highlighted varying regional performance, noting growth in Asia and North America. However, they pointed out challenges in Europe, emphasizing a strategic focus on the quality of sales to reinforce their leading market position. The company expects low-single-digit growth in North America and mid-to-high-single-digit growth in Asia-Pacific. In contrast, Europe is projected to see a high-single-digit decline, primarily in the wholesale segment.
The analysis by JPMorgan suggests that the projected revenue decline will create an operating margin headwind of approximately 150 basis points. If PVH Corp's revenue plan had aligned with the flat year-over-year expectations of the consensus, the operating margins for FY24 could have been around 11.6%, which is 80 basis points higher than the consensus estimate of 10.8%. This indicates that PVH Corp is continuing to make progress on its strategic initiatives outlined in the PVH+ Plan.
InvestingPro Insights
As PVH Corp navigates through its fiscal challenges and strategic initiatives, real-time data from InvestingPro offers a snapshot of the company's current financial health. With a market capitalization of $8.33 billion and a P/E ratio standing at 16.47, PVH Corp presents an intriguing case for investors, especially considering the adjusted P/E ratio for the last twelve months as of Q3 2024, which is slightly lower at 14.99. This aligns with an InvestingPro Tip highlighting PVH's low P/E ratio relative to near-term earnings growth, which may attract value-oriented investors.
Furthermore, the company's revenue growth for the last twelve months as of Q3 2024 has been modest at 2.8%, with a notable gross profit margin of 56.99%. This financial stability is further underscored by PVH's impressive 6-month price total return of 85.89%, reflecting a significant uptick in investor confidence.
InvestingPro Tips also point out that PVH has been profitable over the last twelve months and analysts predict the company will remain profitable this year. This is particularly relevant given the company's recent earnings guidance, as it suggests underlying strengths in PVH's business model and operational efficiency.
For those interested in deeper analysis and more insightful tips, InvestingPro offers additional information on PVH Corp. To access these insights and benefit from an extensive range of financial tools, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 6 more InvestingPro Tips available that could provide further guidance to investors considering PVH Corp in their portfolio.
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