PVH Shares Slip After Q4 Beat: Analysts Say Calvin Klein, Tommy Hilfiger Have 'Healthy' Gross Margins

Shares of PVH Corp (NYSE: PVH) tanked in early trading on Tuesday, even after the company reported upbeat fourth-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• JPMorgan analyst Matthew Boss reiterated an Overweight rating, while raising the price target from $146 to $165.
• BMO Capital Markets analyst Simeon Siegel maintained a Market Perform rating and price target of $107.
• Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating and price target of $155.
• Wedbush analyst Tom Nikic reaffirmed a Neutral rating and price target of $108.

Check out other analyst stock ratings.

JPMorgan: The company’s gross margin expanded by 442 basis points (bps) year-on-year to 60.3%, beating the consensus estimate, and translating to an EBIT margin of 12.1%, Boss said.

“Importantly on the cadence of the quarter, management cited a very strong Holiday period (Black Friday through the Christmas season), while January saw a noticeable pullback from a consumer sentiment standpoint across the US, Europe, and China (albeit a relatively small month of the overall quarter),” the analyst wrote. He added that growth in the company’s core business in 2024 may be higher in the APAC region than in North America, offset by a “high-single-digit decline in Europe.”

BMO Capital Markets: PVH delivered an impressive beat on revenues and earnings, driven by better revenues at both Calvin Klein and Tommy Hilfiger, with “very healthy” gross margins, Siegel said in a note.

The analyst stated, however, that management’s guidance for both the first quarter and full year were “well-below” Street expectations. The full-year guidance “includes a ~2pt headwind related to the Heritage Brands women's intimates sale and a ~1pt impact from the loss of the 53rd -week,” he added.

Telsey: PVH’s total sales came in flat year-on-year, above the consensus estimate of a 2.7% decline, Telsey said. She added that the company guided to a revenue contraction in 2024, of 6%-7% from $9.218 billion, versus the prior consensus estimate of a 1% decline.

“PVH’s exposure to macro challenges in Europe and a cautious wholesale channel overall appear to be the primary factors in the weaker than expected outlook as the company focuses on brand-accretive quality of sales, particularly in Europe,” the analyst further wrote.

Wedbush: “The stock had nearly doubled over the last 6 months (vs. SPX +21%) due to investor excitement over PVH's margin improvement story,” Nikic said.

He added, however, that the guidance of flat margins in 2024 is “problematic because investors believed they had so much margin tailwind that they could expand margins in FY24 regardless of the macro/revenue environment.”

PVH Price Action: Shares of PVH had declined by 23.71% to $106.60 at the time of publication on Monday.

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