On Tuesday, Telsey Advisory Group adjusted its outlook on PVH Corp (NYSE:PVH), the parent company of Calvin Klein and Tommy Hilfiger, by increasing the price target to $155 from the previous figure of $122. The firm maintains an Outperform rating on the stock.
The revision follows PVH Corp's recent financial performance, where the company reported earnings per share (EPS) that exceeded expectations and increased its guidance. This was seen as a testament to the company's operational efficiency under the PVH+ plan, especially in terms of North American profitability.
However, the company did experience a sales shortfall for the quarter and a tempered revenue forecast for the year, which was attributed to growing economic challenges in Europe.
Despite concerns about a decelerating and competitive European market, Telsey highlighted PVH Corp's ongoing improvements in brand strength. This was evidenced by sales growth for Calvin Klein and Tommy Hilfiger, as well as direct-to-consumer (DTC) expansion across various brands and regions in the third quarter. The company is also on track to achieve a double-digit operating margin for the year, which is an improvement from last year's 9.5%.
PVH Corp has also demonstrated enhanced inventory management, with a year-over-year reduction of 19%. Additionally, the company's share repurchase program is set to bolster its valuation, with buybacks now projected to reach $550 million for the year, an increase from the previously planned $400 million following the sale of its Heritage intimates division.
The new price target of $155 is based on an 11.9 times multiple applied to Telsey's two-year forward EPS estimate of $12.98 for PVH Corp. This valuation compares to the recent near-term multiple of 11.2 times and the historical average of 12.7 times.
InvestingPro Insights
As Telsey Advisory Group raises its price target for PVH Corp, the parent company of fashion giants Calvin Klein and Tommy Hilfiger, it's worth noting that the company's stock has been performing robustly. According to real-time data from InvestingPro, PVH Corp is trading at a favorable P/E ratio of 15.8, reflecting a valuation that is attractive relative to near-term earnings growth. This aligns with the InvestingPro Tip highlighting the company's low P/E ratio in the context of expected income growth. Additionally, PVH Corp's stock price has seen a significant uptick over the last six months, with a price total return of 82.99%, and is currently trading near its 52-week high, at 96.55% of the peak.
Investors may also appreciate the company's consistency in dividend payments, which have been maintained for 54 consecutive years, a testament to its financial stability and commitment to shareholder returns. With analysts predicting profitability for PVH Corp this year, as evidenced by a strong return on assets of 4.7% over the last twelve months as of Q3 2023, the outlook remains positive.
For those interested in further insights and tips, InvestingPro offers additional analysis and metrics on PVH Corp, which can be accessed at https://www.investing.com/pro/PVH. Subscribers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, with a total of 9 InvestingPro Tips available to help make more informed investment decisions.
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