PVH Corp. (NYSE: PVH) stock, owner of iconic brands Tommy Hilfiger and Calvin Klein, reached a bottom in March, and now the rebound is on. While headwinds remain for this apparel stock, the company’s PVH+ strategy is working. The result is improving revenue and earnings quality, which is seen clearly in the results and capital return.
PVH’s capital return is noteworthy because of its aggressive nature. It reduced the count by 8% in F2024 and is on track for another substantial decrease in 2025.
The board announced in a separate statement the approval of another $500 million in buybacks under accelerated repurchase rules. That means the $500 million, worth about 15% of the pre-release market cap, will likely be completed by year-end. That’s a powerful tailwind for this market, and other catalysts exist.
One of those catalysts is the analyst sentiment trends. The 15 analysts tracked by MarketBeat peg the stock firmly at a consensus Moderate Buy with a bullish bias due to the high ratio of Buy ratings. More than 50% of analysts rate the stock as a Buy or higher; the problem in early 2025 is that price targets were reset, pulling the rug out from under the market.
The story in early April is that the stock price reset induced by the analysts overcorrected and left the market well below the analysts’ lowest target.
Many revisions are still above the consensus, and most offer a significant double-digit upside. Consensus forecasts a 75% upside relative to the prerelease price action and about 50%, including the post-release pre-opening price pop, and there are reasons to believe the group will revert to price target increases soon.
PVH Stock Rises Despite Tepid Outlook
PVH Corp. struggled with macroeconomic headwinds in FQ4 2024 but navigated the environment well. The company’s $2.37 billion in net revenue is down only 4.8% compared to the prior year, beating the consensus forecast by 160 basis points on a reported basis.
FX translation impacted the results by -2%, divestiture by 1%, and the tough comparison to last year’s 53 weeks impacted results by 3%, leaving the adjusted revenue up slightly for the year.
On a brand basis, Calvin Klein declined by 2%, as reported, and Tommy Hilfiger by 5%, with DTC and wholesales down by 5% each. The smallest segment, Harvest Brands, decreased by 41% due to divestitures but is fast becoming an inconsequential impact on the business.
[content-module:Forecast|NYSE:PVH]The margin news is good. Although company margins contracted slightly in Q4 compared to last year, they still widened significantly for the year, setting a record at the gross level. Q4 GAAP and adjusted EPS are down compared to the prior year, outpacing the decline in revenue, but far less than expected.
The adjusted $3.27 beat the average forecast by $0.06 or 185 bps, sufficient to sustain the balance sheet health, company operations, and aggressive repurchases.
Guidance was tepid but reflects the company’s efforts to reposition and increase operational leverage. The forecast for revenue is flat to slightly up, with a flat to slightly wider margin, which is also sufficient to sustain the capital return outlook and fortress balance sheet.
Highlights at the end of 2024 include increased cash and inventories offset by divestiture. Total assets are down slightly, with liabilities also down slightly, and equity is up.
The Technical Outlook: PVH Corp. In Rebound Mode
PVH's price action was bearish ahead of the release, setting the market up to extend its sell-off. However, the good news, reassuring guidance, and buyback announcement led to a 15% pop that has this market in rebound mode.
The market will likely continue higher and reenter the analysts’ target range, with the potential to reach the consensus target fairly quickly. Critical resistance targets are at $85 and $90.
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