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UBS lowered the price target on PVH Corp (NYSE:PVH) to $92.00 from $100.00 while maintaining a Buy rating ahead of the company’s upcoming Q4 earnings announcement on March 27.
According to the firm, the market’s main focus will likely be management’s full 2023-year EPS outlook. While UBS expects the company to guide to a range of $8.50-$9.00, the midpoint of which is below the sell-side’s $8.96 view, they believe this range will be above the market’s expectation.
Softline stocks continue to rise on “less-bad-than-feared” 2023 guides and the firm believes PVH will benefit from this trend, too. According to the firm, the risk is some elements of the company’s “PVH+ Plan” are taking longer to play out and this results in a weak 2023 EPS guide.
For Q4/22, the firm expects a sales decline of 3% year-over-year, noting it believes sales in Europe were relatively strong in the period benefitting from continued tourism from the U.S. and the Middle East.
The firm lowered its Q4 EPS estimate to $1.75 from $1.88 (vs. consensus of $1.67), noting it continues to see upside potential for the quarter though not to the extent it previously anticipated. “We see slightly lower gross margins given the more promotional environment in the Holiday period. We also see a lessening FX headwind offset by pressure in the wholesale channel which likely limited re-order shipments in the period,” added the firm. Their full-year estimate moved to $8.38 from $8.50 previously.
The firm lowered its EPS estimate to $8.55 from $10.35 for fiscal 2023 and $10.90 from $12.85 for fiscal 2024 to reflect a weakening consumer spending outlook.
