Brean Maintains Buy On PVH Corp Heading Into Q2 Results

Brean Capital reaffirmed its Buy rating on PVH Corp (NYSE: PVH) ahead of its second-quarter results scheduled for August 24, saying that the company's inflecting operating model remains under-appreciated.

The brokerage expects earnings of $1.28 on revenue of $1.924 billion versus the Street's view of $1.29/$1.904 billion.

"We have a constructive stance on shares heading into Wednesday's 2Q print, believing rev growth could sustain in 2Q despite domestic wholesale headwinds, driven by continued strength in TH international and ongoing brand heat from CK," analyst Eric Tracy wrote in a note.

"With CK generally outperforming what has been a challenged domestic wholesale environment (1Q domestic wholesale biz up more than +20 percent y/y), our conviction here is enhanced by recent string of better-than-feared 2Q department store reports that have catalyzed a material relief rally in shares," Tracy noted.

Further, Tracy said there is potential upside in FY16 guidance on easing FX compares, clean inventory positioning and opportunity for sequential improvement in THNA. The company's guidance calls for reported revenue growth/EPS of +2 percent/$6.45–$6.55.

The analyst raised the third-quarter EPS view to $2.39 from $2.36 and FY16 EPS estimate to $6.55 from $6.53.

"Taken together, we believe 1) ongoing rev momentum at CK / TH int'l, 2) opportunity for continued CK profitability improvements, 3) waning FX headwinds, and 4) FCF optionality that should facilitate strategic license acquisitions can drive EPS upside," Tracy added.

The analyst also raised the price target to $122 from $115, while shares were up 2.54 percent to $109.94 at time of writing.