PVH Corp. has the strength to drive long-term earnings growth – UBS

By Sam Boughedda 

UBS remains bullish on PVH Corp. (NYSE:), raising its price target on the stock to $115 from $92 and maintaining a Buy rating in a note to clients on Tuesday.

UBS analysts said, despite multiple macro headwinds, UBS believes PVH has the brand strength and balance sheet to drive earnings growth over the long term.

“We forecast the company delivering a 5-yr. +15% EPS CAGR,” wrote the analysts. “CEO Stefan Larsson has only just begun executing his plan to improve PVH’s profitability, and we think there are major margin unlocks that will play out over the next few years.”

They feel PVH’s initiatives to elevate its brands, improve its product assortment, raise its direct-to-consumer penetration, better manage inventory, increase speed-to-market, and find cost efficiencies are working and “could deliver much larger financial benefits than previously thought.”

“As PVH’s earnings rebound and long-term drivers become clear, we expect the stock’s 8x P/E to rebound as the market starts seeing more opportunity ahead,” they added.