On Friday, Guggenheim maintained a Buy rating on shares of PVH Corp (NYSE:PVH) and increased the price target to $125 from $105. PVH Corp, the parent company of iconic brands such as Tommy Hilfiger and Calvin Klein, reported third-quarter earnings that surpassed expectations, prompting the firm to adjust its price target.
According to InvestingPro analysis, PVH appears undervalued, trading at an attractive P/E ratio of 9.14x and showing strong financial health with a "GOOD" overall rating.
PVH Corp announced an adjusted diluted EPS of $3.03 for the third quarter of 2024, exceeding the $2.50 estimate. The company's total revenue for the quarter declined by 4.6% to $2.26 billion, which was still above the forecasted $2.21 billion.
The revenue included a 2% impact from the divestiture of the Heritage Brands women's intimates business. InvestingPro data reveals impressive gross profit margins of 60% and strong shareholder returns through aggressive share buybacks. Subscribers can access 6 additional ProTips and comprehensive financial metrics.
The quarter's performance was influenced by a 1% benefit from the shift of wholesale shipments in Europe from the fourth quarter to the third, due to earlier-than-expected inventory receipts. The International business saw a 2% constant currency (CC) decline, largely due to planned reductions in Europe, which decreased by 4% CC. This was offset by growth in the Asia Pacific region, which increased by 3% CC, led by strong digital sales.
In North America, excluding the Heritage Brands, there was a 6% decline, attributed mainly to the planned shift of wholesale sales from the third to the fourth quarter. However, excluding these timing impacts, wholesale sales in North America for the second half of 2024 are trending slightly higher than the previous year.
The third-quarter gross margin for PVH expanded by 170 basis points to 58.4%, although this was below the estimated figure. Inventory levels rose by 9%, reflecting lean levels from the previous year and early receipts in anticipation of the holiday season. PVH also strategically increased investment in essential products to achieve a 95% in-stock target.
Despite additional top-line foreign exchange pressures, Guggenheim's outlook for PVH remains largely unchanged. The firm maintains its full-year 2024 and 2025 EPS estimates at $11.70 and $12.60, respectively. The raised price target reflects confidence in PVH's long-term earnings growth potential, bolstered by its PVH+ initiatives.
For deeper insights into PVH's valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company's financial health, valuation metrics, and growth potential among 1,400+ top US stocks.
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