UBS maintains PVH stock Buy rating with $160 price target

On Tuesday, UBS analysts, led by Jay Sole, maintained a Buy rating on shares of PVH Corp (NYSE:PVH) with a steady price target of $160.00, representing significant upside from the current price of $64.64. Sole highlighted PVH’s brand strength and solid financial foundation as key factors supporting the potential for earnings growth over an extended period. The analysts project a double-digit percentage compound annual growth rate (CAGR) in earnings per share (EPS) for PVH over the next five years. According to InvestingPro data, the stock appears undervalued, trading at a modest P/E ratio of 5.2x with impressive gross profit margins of 60%.

The UBS team expressed confidence in CEO Stefan Larsson’s ongoing strategy to enhance the company’s profitability, predicting significant margin improvements in the coming years. They anticipate that as PVH’s earnings recover and its long-term growth drivers become more apparent, the current price-to-earnings (P/E) ratio of 6 times its first fiscal year (FY1) earnings will escalate substantially. InvestingPro analysis reveals the company maintains a strong financial health score of "GOOD," with robust free cash flow yield of 20% and annual revenue of $8.77 billion.

PVH’s performance in the fourth quarter of 2024 bolstered UBS’s optimistic outlook. The company outperformed expectations with its earnings report for 4Q24 and provided EPS guidance for FY25 that exceeded consensus, despite the challenges posed by an uncertain macroeconomic environment.

Sole’s commentary underscored the belief in PVH’s trajectory, stating, "We believe PVH has the brand strength and balance sheet to drive earnings growth over the long-term." He further emphasized the potential for margin expansion, "We think there are major margin unlocks that will play out over the next few years." InvestingPro has identified several bullish indicators, including management’s aggressive share buybacks and the company’s impressive dividend track record. Subscribers can access 13 additional ProTips and a comprehensive Pro Research Report, providing deeper insights into PVH’s valuation and growth prospects.

PVH Corp’s recent earnings report and the favorable guidance for the upcoming fiscal year have served to increase UBS analysts’ conviction in their positive assessment of the company’s stock. The affirmation of the $160 price target reflects their expectation that PVH will continue to demonstrate financial resilience and growth potential.

In other recent news, PVH Corp reported fourth-quarter earnings per share of $3.27, surpassing analyst expectations of $3.24. The company also exceeded revenue projections with $2.37 billion, despite a year-over-year decline of 5%. Looking ahead, PVH has provided a strong outlook for fiscal 2025, projecting earnings per share between $12.40 and $12.75, which is above the consensus estimate of $11.68. The company anticipates revenue to be flat or slightly higher compared to 2024. In response to these developments, BMO Capital Markets and Evercore ISI have adjusted their price targets for PVH, lowering them to $93 and $105, respectively, while maintaining their Market Perform and Outperform ratings. Despite challenges such as a decline in China revenues and increased freight costs, PVH has implemented a $500 million Accelerated Share Repurchase program to bolster its financial position. Analysts from Evercore ISI noted this move as a defensive action to manage profit and loss amidst a complex business environment. PVH’s management has also provided guidance for the first quarter that exceeds analyst expectations, further indicating resilience in a challenging market.

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