Several analysts quickly cut their price targets on the company following earnings.
Since stocks overwhelmingly trade more on potential than trailing performance, shares of PVH (PVH 0.85%) were tumbling over the past few days. The company notched beats with its fourth-quarter figures but whiffed on bottom-line guidance.
This was followed by a wave of analyst price-target cuts. As a result, the stock’s price was down by nearly 24% week to date, as of Thursday night, according to data compiled by S&P Global Market Intelligence.
Double beats in the fourth quarter, but weak guidance
Tuesday morning, PVH released its fourth-quarter results and possibly wished it hadn’t. Revenue was down slightly on a year-over-year basis (to just under $2.5 billion). However, non-GAAP (adjusted) net income zoomed 47% higher to slightly more than $222 million, or $3.72 per share.
Both line items convincingly beat the consensus analyst estimates of $2.42 billion and $3.52, respectively. So far, so good.
But then, PVH proffered guidance that fell short of expectations. For the entirety of this year, management is forecasting a 6% to 7% year-over-year decline in revenue. As for profitability, it believes per-share earnings will land at $10.75 to $11. Unfortunately, that’s quite some distance below the average analyst estimate of $12.08 for the year.
Analysts were quick to cut their price targets
Investors weren’t pleased with this, a feeling exacerbated by that series of pundit price-target reductions. Several of these came from influential researchers. For example, Bank of America analyst Christopher Nardone sliced $34 per share from their price target for a new level of $122. The big four bank isn’t bearish, though, as it maintained its buy recommendation on the stock.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.