Market Overview

Calvin Klein Is Stronger Than The Street Thinks, UBS Says In Upgrade Of Parent Company PVH

Share:
Calvin Klein Is Stronger Than The Street Thinks, UBS Says In Upgrade Of Parent Company PVH

The Calvin Klein brand is stronger for PVH Corp (NYSE: PVH) than the market thinks, according to UBS. 

The Analyst 

UBS analyst Jay Sole upgraded PVH from Neutral to Buy and raised the price target from $145 to $170.

The Thesis

The market views Calvin Klein’s 325-basis point year-over-year EBIT margin drop in the third quarter as a sign the brand is weakening, Sole said in a Monday note — but he disagrees.

The brand has faced near-term sales and margin headwinds from fashion misses with its CK Jeans and 205W39NYC lines. The brand can recover, the analyst said. 

“Our view is Calvin Klein’s 2018 missteps are fixable and spring/summer 2019 wholesale order growth will accelerate quarter-over-quarter." 

The analyst is modeling 11-percent five-year EPS CAGR and said PVH is worth 14x FY19E EPS versus today’s 9x P/E.

A wholesale buyer survey reveals that Calvin Klein's order growth is not only strong on an absolute basis, but higher than peers such as Ralph Lauren Corp (NYSE: RL), Sole said. Data indicates the company is clearing inventory, and Tommy Hilfiger’s resurgence also bodes well for PVH moving into 2019, he said. 

“We see a solid opportunity to buy stock in two leading global brands at an attractive valuation." 

The market is concerned with the potential effect of tariffs and FX headwinds on the apparel company, but PVH sources less than 20 percent of its American inventory from China, the analyst said. 

“Our analysis suggests only an 80-basis point gross margin headwind if the U.S. establishes 25-percent tariffs on all softgoods imported from China.”

Price Action

PVH Corp shares were up more than 5 percent at $98.58 at the time of publication Monday. 

Related Links:

2 Reasons Deutsche Turned Bullish On PVH Corp

Goldman Sachs Bullish On Tapestry, VF Corp, Tiffany; Says Sell PVH

Latest Ratings for PVH

DateFirmActionFromTo
Jun 2020Deutsche BankMaintainsHold
Apr 2020UBSMaintainsBuy
Apr 2020JP MorganMaintainsNeutral

View More Analyst Ratings for PVH
View the Latest Analyst Ratings

 

Related Articles (PVH)

View Comments and Join the Discussion!

Posted-In: Calvin Klein Jay Sole Ralph Lauren Tommy HilfigerAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
OCGNChardan CapitalMaintains0.700
ZMB of A SecuritiesMaintains240.0
PTONB of A SecuritiesMaintains54.0
IRBTB of A SecuritiesMaintains77.0
DKSB of A SecuritiesMaintains45.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com