Risk/Reward On PVH 'Remains Compelling,' According To Brean

• In a report issued Tuesday, Bren Capital analyst Eric Tracy reiterated a Buy rating on shares of PVH Corp PVH.
• The analyst tweaked his estimates for the company and trimmed his price target from $125 to $111, ahead of the third quarter earnings call next week.
• Tracy noted that the company’s "Risk/Reward Remains Compelling."

Based on industry checks and read-throughs, analysts at Brean decided to tweak their estimates and target price on PVH lower ahead of the report of its third quarter financial results next Thursday.

They think strength in Europe (both TH and CK) will probably be overshadowed by "domestic department store exposure (seasonal headwinds) and incremental FX drags (transactional impact as hedges roll off)." Having said this, they also believe "many company specific levers remain," which could prove their estimates conservative, especially moving into fiscal 2016.

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The firm's optimistic view is based on a few key factors: (1) "enhanced constant-currency CK profitability/synergy opportunity," (2) strength in CK and TH international businesses (ex-FX), (3) FCF generation capabilities that supports accretive acquisitions and (4) an attractive valuation.

As sentiment remains weak and market expectations continue to decline (estimates should be mostly de-risked by the third quarter), the analysts now believe the risk/reward is compelling at PVH.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.