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UBS Picks Clothing Stock as Top Choice with 40% Upside



PVH, the parent company of iconic brands like Calvin Klein and Tommy Hilfiger, is expected to see strong earnings ahead, according to UBS analyst Jay Sole. Sole recently increased his price target on PVH by 9% to $174, implying a potential upside of 43%. Despite a slight decline in the stock this year, PVH has seen a 7% increase in June, thanks to exceeding earnings and revenue expectations in its fiscal first quarter. The company also issued strong guidance for earnings per share in the current quarter and full year, sparking optimism among investors.

Sole describes PVH’s quarterly earnings as “high-quality,” which has increased his confidence in the company’s long-term growth potential. He believes that PVH has the brand strength and balance sheet to continue driving earnings growth over the long term. Sole anticipates more beat and raise quarters over the next 12 months, which should drive sell-side EPS estimates higher. Despite a sales decline in the first quarter of this year, Sole expects PVH’s sales to accelerate over the next four quarters, with growth turning positive in FY25, fueled by product and marketing efforts.

Looking ahead, Sole forecasts that PVH will deliver five-year earnings growing at a 10.5% compound annual growth rate. He also raised his FY26 earnings per share estimate to 4%. Sole also predicts that PVH’s gross margin will reach a new peak as the company shifts to direct-to-consumer and international sales, cost recovery, and quality-of-sale initiatives. While a majority of PVH’s sales and profits currently come from outside North America, Sole believes that the company will be able to drive U.S. sales growth moving forward.

In conclusion, investors are optimistic about PVH’s future prospects, driven by strong quarterly earnings and guidance, as well as the company’s brand strength and growth potential. With a buy rating from UBS analyst Jay Sole and a price target increase of 9%, PVH is poised for strong earnings ahead. Despite some challenges in the first quarter, Sole anticipates sales acceleration and positive growth in the coming quarters. PVH’s focus on direct-to-consumer and international sales, along with other initiatives, is expected to drive earnings growth over the long term. With a potential upside of 43%, PVH remains a promising investment opportunity in the fashion industry.

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