PVH suffers stock downgrade following Raf Simons departure

By

Gabriella Lacombe

Published
Jan 23, 2019

Analysts at investment bank Cowen & Co. have downgraded PVH stock from outperform to market perform, as a result of Raf Simons' departure from Calvin Klein in December of 2018.

The global fashion company's price target was lowered from $142 to $119, with shares down 4.5 percent at $105.21 as of Tuesday afternoon, according to financial news and analysis company, Benzinga. 

Earlier this January, PVH Corp predicted that its fourth-quarter and full year 2018 revenue would reach at least $2.40 billion and $9.57 billion, respectively, in addition to raising its fourth-quarter and full year outlook, and announcing a $120-million restructuring plan for Calvin Klein.

According to Benzinga, Cowen analyst John Kernan noted that PVH is 85 percent buy-rated by the Street, implying an anticipated elevated growth and margins in the coming years. However, Benzinga notes that it is more likely that top-line or margins could fall short of expectations as the Calvin Klein brand undergoes its restructuring, and that this could result in total non-GAAP EPS growth of a mid-to-high single-digit. 

Cowen also predicts top-line growth to cool down from 7 percent growth in fiscal 2018 to around 3 percent annually through fiscal 2022, partially as a result of continued uncertainty among PVH's five largest wholesale retail partners.

Benzinga reports that PVH's stock is trading at 11 times fiscal 2019 EPS estimates, which Cowen said is a discount to its recent history of 15 times. 

PVH's share price has fallen approximately 30 percent in the last 12 months.