May 07, 2024 16:04 GMT
PVH (Baa3, BBB-; Double Pos)
CONSUMER CYCLICALS
27s another -8 today - no issue with moves over last week & see more room to go to FV. Again 29s are being left behind.
- Flatteners screen cheap; +40bp spread (+25bp on yield) for +1.6y term extension - troubled Kering is spread +15 there as point of comparison.
- Re. 29s in isolation; despite attractive carry (Z+130) & roll we are still weary heading into a rough 1Q earnings.
- Raters & analyst (we've seen) stuck to PVH's side after guidance for this year triggered a sell-off (constant-currency revenue to decrease -6-7% vs. flat consensus at the time), analyst noting some of it was one one-offs (-2% from sale of heritage brands) & some on a purposeful rotation away from Europe wholesale.
Consensus has front-loaded FY weakness to 1Q so we are keen to see how co does & any updates to guidance. We don't expect any drastic changes to cap. allocation - BS was gross 1.8x/net 1.2x levered in FY23 (carries a light debt load). Its guided for $400m in buybacks this year with qtrly dividends currently running at a negligible $9m/yr.
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