11:26 AM EDT, 08/29/2024 (MT Newswires) -- PVH (PVH) is likely to see improved profitability in the next few years due to its brand strength and balance sheet, UBS said in a note to clients emailed Thursday.

The investment firm said it sees PVH delivering a 10.5% five-year EPS compound annual growth rate. Also, the company will likely see "major margin unlocks in the next few years, as CEO Stefan Larsson's PVH+ Plan goes into full effect," the note said.

One of the key takeaways after PVH's Q2 results on Tuesday is that the company's "fall product assortment should serve as a positive catalyst" as it will be the "first assortment fully impacted by the PVH+ Plan," UBS said.

"We believe this should drive an inflection in PVH's wholesale channel sales growth rate in 1H25," the investment firm said.

UBS also noted that PVH posted an about 240 basis point gross margin expansion in Q2. "We think PVH is on track to deliver ~200 bps of gross margin expansion in FY24 and to reduce its share count at a +HSD% rate," the note said.

UBS reiterated PVH's buy rating and $174 price target.

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