PVH Corp (NYSE:PVH) just got hammereddown nearly 18% at 12.22pm. The selloff came despite a blockbuster year: record gross margins of 59.4%, $600 million in free cash flow, and a 10% operating margin. Non-GAAP EPS for fiscal 2024 came in at a record $11.74, up 10% from last year. The company even returned $500 million to shareholders through buybacks. On paper, these are the kinds of numbers that should get a standing ovation. Instead, investors hit the exits.
So what’s going on? A few storm clouds are hanging over the 2025 outlook. Management is guiding for flat to slightly higher revenue, and while EPS could rise to $12.75, the road ahead looks bumpier. Freight costs are ticking up, promotions are likely to intensify, and Chinaone of PVH’s key marketsis facing a slowdown post-holiday. To make matters worse, PVH was added to China’s unreliable entity list by MOFCOM, introducing a new layer of geopolitical risk. Calvin Klein also ran into product development delays, adding short-term margin pressure to the mix.
And yetWall Street hasn’t given up. The average price target from 13 analysts sits at $98.23, implying a potential 48.9% upside from current levels. GuruFocus places PVH’s fair value at $97.10. Brokerage consensus is still Outperform. Underneath the headline drop, there are signals of strength: EBIT surged over 40% in North America, Europe’s store traffic picked up in back-to-back quarters, and core product sell-through is improving. This might just be a stock investors don’t like right nowbut could end up regretting not buying later.
This article first appeared on GuruFocus.