Calvin Klein Concerns Are Turning Into Positives For PVH, Morgan Stanley Says In Bullish Initiation

PVH Corp PVH may finally see improving sentiment for its Calvin Klein brand, according to Morgan Stanley. 

The Analyst

Kimberly Greenberger initiated coverage of PVH with an Overweight rating and $164 price target.

The Thesis

Good things come to those who wait on PVH, as Chinese macro and Calvin Klein execution concerns are overdone, Greenberger said in the Tuesday initiation note. 

The analyst said she expects a second half of 2019 and 2020 re-acceleration as recent negatives pivot to positives.

“We see the concerns that have pressured the stock over the last eight months turning into positives in [the second half]." 

Fashion and merchandising execution issues at Calvin Klein fueled a 45-percent decline in the stock beginning in July 2018, Greenberger said. 

Morgan Stanley views these issues as transitory as Calvin Klein management recalibrates its balance between fashion and core/basics — and supportive China policy measures stabilize consumer spending in the second quarter.

“As these issues resolve and EPS growth re-acclimated, we expect PVH stock can retract to higher levels, and at the current valuation of 12.x P/E we see a compelling opportunity to own this global growth story." 

Price Action

PVH shares were down 0.24 percent at $127.01 at the time of publication Tuesday. 

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