Why PVH stock plummeted this week

Because stocks are traded overwhelmingly more on their potential than on their subsequent performance. PVH (PVH 0.85%) It’s been rolling for the past few days. The company had a strong fourth quarter, but was not satisfied with its final guidance.

This was followed by a wave of price target cuts from analysts. As a result, the stock was down nearly 24% this week as of Thursday night, according to data compiled by S&P Global Market Intelligence.

4th quarter double beat, weak guidance

On Tuesday morning, PVH reported its fourth quarter results, and it probably would have been better if it hadn’t. Sales were down slightly compared to the previous year (less than $2.5 billion). However, non-GAAP (adjusted) net income increased 47% to $222 million, or just over $3.72 per share.

Both items clearly beat analysts’ consensus estimates of $2.42 billion and $3.52 billion, respectively. So far so good.

However, PVH presented guidance that fell short of expectations. For the full year, management expects sales to decline 6 to 7 percent year-over-year. As for profitability, we expect earnings per share to be in the range of $10.75 to $11. Unfortunately, this is significantly lower than analysts’ average annual estimate of $12.08.

Analysts were quick to lower their price targets.

Investors were not happy about this, and this feeling was further exacerbated by a series of target price cuts by experts. Some of these come from influential researchers. for example, bank of america Analyst Christopher Nardone lowered his price target from $34 per share to $122. However, the big four banks are not bearish as they have maintained a buy recommendation on the stock.