PVH

PVH Corp ($PVH) CEO's $1M 'Conviction Buy' Amid 46% Plunge...Undervalued Recovery Signal?

06/30/2025 12:17

PVH Corp ($PVH) is drawing significant investor attention following CEO Stefan Larsson's substantial $1 million share purchase on June 26th. This move by the leader of the global fashion company behind Tommy Hilfiger and Calvin Klein brands represents a powerful signal of confidence amid challenging market conditions. The timing and scale of this purchase are particularly noteworthy. Larsson acquired 15,644 shares at a weighted average price of $63.92, representing a significant bet at current price levels. More importantly, this purchase comes after PVH shares plummeted 46% over the past year, falling from $122 in June 2024 to the mid-$60s range by June 2025, highlighting the CEO's strong conviction about the company's prospects. The insider trading pattern reveals additional insights. Just before Larsson's major purchase, Director Jesper Andersen bought 600 shares (approximately $40,000) at $66.10 on June 11th. This contrasts with Executive Vice President Mark Fischer's $336,000 sale in December 2024, making recent management buying activity even more pronounced. CEO Larsson's bold move becomes more significant when considering the challenges PVH faces. The company is currently under investigation by Chinese authorities regarding Xinjiang-related products and faces headwinds from Trump administration tariffs, which are expected to impact earnings by over $1 per share annually. The company has already revised its 2025 non-GAAP EPS guidance downward from $12.40-12.75 to $10.75-11.00. Despite these headwinds, fundamental improvements are emerging. Recent first-quarter results showed revenue exceeding expectations, with adjusted EPS of $2.30 beating guidance. Europe showed particular strength with 5% growth, and the company announced an aggressive $500 million accelerated share repurchase program this year. Valuation metrics suggest the stock has reached attractive levels. The PEG ratio stands at just 0.40, indicating potential undervaluation relative to growth prospects, while the price-to-book ratio of 0.68 suggests shares trade below book value. Jefferies recently upgraded PVH to buy with a $105 price target, implying 23% upside potential from current levels. Key indicators investors should monitor include resolution of China-related risks, as PVH remains on China's Unreliable Entity List, creating business constraints. Progress on tariff mitigation measures expected to roll out in the second half could serve as positive catalysts for margin recovery. Conversely, warning signs include continued Asia-Pacific sales declines of 13%, reflecting ongoing China consumer weakness, and elevated short interest at 14%. The debt-to-equity ratio of approximately 80% could create pressure in a higher interest rate environment. In an optimistic scenario, simultaneous resolution of tariff pressures and China risks could normalize margins while accelerating growth in Europe and the Americas, potentially achieving Jefferies' $105 target. The most likely base case involves gradual recovery starting in the second half of 2025, with shares potentially reaching the $80-90 range as tariff impacts moderate. Risk scenarios include escalating U.S.-China trade tensions or prolonged global consumer weakness, which could keep shares range-bound at current levels or lower. Given the debt burden, unexpectedly persistent high interest rates could create additional pressure. Larsson's $1 million purchase transcends symbolic significance, representing management's assessment that current share prices substantially undervalue the company's intrinsic worth while demonstrating strong conviction in future recovery prospects. However, investors should carefully consider short-term volatility and macroeconomic risks when evaluating this compelling but complex investment opportunity.