In a report published Thursday, Morgan Stanley analyst Jay Sole reiterated an Equal-Weight rating on PVH (NYSE PVH).
In the report, Morgan Stanley noted, “Our view is the PVH story is about more than Warnaco. The Heritage division 1Q revenue miss highlights the risk these brands may hamper PVH EPS growth. Elevated 2Q Calvin Klein marketing expense is causing a 2Q guide-down. Our analysis suggests 47% of PVH business is done in channels where pricing pressure is greatest. While we forecast better 2H industry sales growth, it may not be strong enough to allow PVH to meet 2H14 expectations. Secondly, we see further risk PVH must accelerate CapEx and other investments. In our view, earnings likely do not grow at the low-teens rate bulls expect. We think current P/E is fair. Stay EW. We continue to prefer secular winners. Nike is our top pick.”
PVH closed on Wednesday at $130.68.
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