Bank of America downgraded PVH Corp to Underperform from Neutral and cut its price objective to $70 from $90, citing the apparel maker’s heavy exposure to Europe, the Middle East and Africa (EMEA) amid a weakening macroeconomic backdrop.
The brokerage said PVH, which generates roughly half of its sales from the EMEA region, faces greater risks than peers as geopolitical tensions in the Middle East weigh on consumer demand, tourism flows and wholesale activity. Analysts warned that a recovery in the region could take longer than expected, limiting upside potential despite the company’s long-term margin improvement opportunities.
PVH has reported softer demand in Europe alongside sales and margin headwinds in its Middle East and Türkiye operations. While the Middle East excluding Türkiye accounts for only about 1% of sales, it contributes roughly 7% of total EBIT because of its wholesale-heavy business model. The bank noted that wholesale partners are likely to remain cautious about inventory commitments in an uncertain environment.
Bank of America also highlighted that PVH’s guidance already incorporates expected tariff refunds worth about $100 million, equivalent to roughly a 100-basis-point benefit to annual gross margin. As a result, the firm sees less earnings cushion relative to peers in 2026 and tougher margin comparisons in 2027.
Despite the tariff benefit, analysts expect PVH’s 2026 EBIT margin to remain flat as EMEA weakness, tariff costs, licensing transitions and increased marketing spending offset potential gains. The brokerage reduced its earnings forecasts for 2026-2028 by 1% to 3% and said near-term profit-and-loss volatility is likely to continue overshadowing operational progress.
The revised valuation is based on 4 times projected 2027 EV/EBITDA, down from 5 times previously, reflecting what Bank of America views as slower growth, lower margins and elevated EMEA-related risks compared with industry peers.
source https://www.investing.com/news/stock-market-news/pvh-downgraded-by-bofa-as-middle-east-and-europe-exposure-clouds-outlook-4761180
