Market Overview

2 Reasons Deutsche Turned Bullish On PVH Corp


Investors looking for a stock to buy on the market pullback may want to consider apparel maker PVH Corp (NYSE: PVH), according to Wall Street's newest bull analyst.

The Analyst

Deutsche Bank's Tiffany Kanaga upgraded PVH's stock from Hold to Buy with a price target boosted from $150 to $175.

The Thesis

The selloff, coupled with two new catalysts to PVH's longer-term story, creates a good opportunity for investors to be buyers of the stock, Kanaga said in a note. PVH stands to benefit from ongoing weakness in the U.S. dollar and reverse from a cumulative EPS headwind of $3.20 over the past three years to become an estimated 36 cent per share benefit in 2018 and 22 cent per share benefit in 2019.

In fact, PVH has shown above-algorithm growth excluding foreign exchange rates in 2015 of 15.5 percent and 19.9 percent in 2016, the analyst said. Expectations for a continuation of the trend in 2017 remains in place and creates a "bull path" for the stock to rise as high as $192 per share. The Street's 2019 EPS estimate of $9.95 is "clearly too low" as it assumes either a 10.2 percent compounded annual growth rate excluding foreign exchange or no thorough foreign exchange refresh.

The second leg to PVH's growth stems from management's move to increase its brand awareness and oversee a global marketing effort, Kanaga said. Some of these initiatives include the Kardashian #MyCalvins TV campaign and large digital displays inside Macy's stores. This "smart strategy" will likely pay-off and create a more favorable risk to reward proposition for investors moving forward.

Price Action

Shares of PVH were trading higher by more than 1.4 percent at $149.12.

Related Links:

Oxford, PVH: The Retailers In Fashion At B. Riley FBR

Benzinga's Top Upgrades, Downgrades For February 7, 2017


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Posted-In: Apparel Deutsche Bank Tiffany KanagaAnalyst Color Upgrades Price Target Analyst Ratings

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