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On Tuesday, Citi analyst Paul Lejuez adjusted the price target for PVH Corp (NYSE:PVH), the parent company of brands such as Tommy Hilfiger and Calvin Klein, reducing it significantly from $123.00 to $72.00, while maintaining a Neutral stock rating. The revision follows expectations for the company’s fourth-quarter sales to align with consensus estimates and earnings per share (EPS) to slightly exceed both the consensus and the company’s guidance. According to InvestingPro data, PVH currently trades at an attractive P/E ratio of 5.5x and appears undervalued based on comprehensive Fair Value analysis. The stock has seen significant pressure, declining nearly 27% over the past six months.
Lejuez anticipates a sales decline of 6.5% for the quarter, which is within the range of the company’s own forecast of a 6-7% decrease and slightly worse than the consensus estimate of a 5.9% drop. The EPS is projected at $3.29, higher than the guidance of $3.05-3.20 and the consensus estimate of $3.23. The analyst noted that the guidance for the quarter was appropriately cautious.
Despite management’s previous indications of expecting modest sales growth and margin expansion in fiscal 2025, Lejuez expressed concerns about the volatile macroeconomic environment and the lack of visibility in China, particularly after PVH was placed on the unreliable entity list. These factors could lead management to predict flat or declining sales and EBIT margin for the upcoming year.
Lejuez’s forecast for the company’s guidance includes sales ranging from flat to a 1% decrease on a reported basis, which is less optimistic than the consensus estimate of a 0.2% increase. Adjusted for currency changes, sales are expected to be between a decrease of 0.5% and an increase of 0.5%. The EPS guidance is anticipated to be set between $11.40 and $11.70, compared to a consensus expectation of $11.80.
The Citi analyst suggested that while market expectations are already low, the ongoing uncertainties in China may cause investors to remain cautious about engaging with PVH Corp’s stock. For deeper insights into PVH’s valuation and future prospects, including exclusive Fair Value models and financial health metrics, investors can explore the full analysis available on InvestingPro, where expert research covers 1,400+ US stocks with actionable intelligence for smarter investment decisions.
In other recent news, PVH Corp. has been placed on China’s List of Unreliable Entities by the Ministry of Commerce, raising concerns about its operations in the Chinese market. This follows an ongoing investigation under the Provisions on the List of Unreliable Entities, which could result in various punitive measures, including monetary fines and restrictions on import and export activities. The company has acknowledged that this development could significantly impact its ability to produce and sell goods in China. Additionally, PVH Corp. is under scrutiny for alleged inappropriate activities related to Xinjiang, with initial findings suggesting potential improper conduct. The investigation, which began in September 2024, is ongoing, and further discussions with Chinese authorities are expected. In a separate development, PVH Corp. has announced a change in its executive leadership, with Erik Graf set to succeed James Holmes as Executive Vice President and Corporate Controller. Graf, who has been with the company since 2010, will assume his new role on May 1, 2025. These recent developments come as PVH Corp. navigates challenges in the global apparel industry.
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