On Friday, CFRA, a prominent financial research firm, increased its price target on shares of PVH Corp (NYSE:PVH), a global apparel company known for its Calvin Klein and Tommy Hilfiger brands. The new stock price target is set at $159.00, up from the previous $125.00, while the firm retains a Buy rating on the stock.
The adjustment comes as CFRA acknowledges PVH's strategic shift following its exit from Heritage Brands. The firm anticipates that the company's focus on Calvin Klein and Tommy Hilfiger will drive benefits over the next 12 months.
The raised price target reflects a 12.0x multiple on the firm's fiscal year 2025 earnings per share (EPS) estimate, which remains below PVH's five-year average forward price-to-earnings (P/E) multiple of 13.1x.
CFRA has kept its fiscal year 2024 EPS estimate for PVH steady at $10.50 but has increased the fiscal year 2025 estimate by $0.75, bringing it to $13.25. This revision is underpinned by an expectation of gross margin expansion to 10.3% in fiscal year 2025, as the company is predicted to benefit from more efficient operations and favorable freight and supply chain conditions.
The firm also projects that PVH's shares will experience multiple expansions, trading around 12.5x forward EPS estimates, marking a significant increase from the 8.2x seen over the past two years. This anticipated expansion is based on the belief that PVH is now a leaner and more efficient organization.
Despite PVH's stock having already surged by over 75% in the past six months, CFRA suggests that there is still considerable upside potential. This optimistic outlook is attributed to the company's successful streamlining efforts and the strength of its two core brands in the competitive apparel industry.
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