Freedom proposed an options idea on PVH shares with potential returns of 100%

Freedom Broker analysts expect PVH Corp. (PVH) shares to recover after a deep correction and suggest implementing this idea by buying a call option. The target range for the shares is $82–88, and the expected return of the options strategy is 100%.

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About the company

PVH Corp. develops a global business in the fashion industry. Among the company’s key brands are Calvin Klein and Tommy Hilfiger, whose sales performance remains an important factor in the issuer’s financial results.

A strong report eased investors’ concerns

According to Freedom Broker analysts, PVH’s results for the second quarter dispelled some of the market’s concerns. Earnings per share came in at $3.7, profitability exceeded consensus forecasts, and management kept full-year guidance unchanged. If the business in Europe stabilizes, PVH shares could return to the $82–88 range, the analysts note.

The investment thesis is also based on the company’s low valuation. The shares trade at about 6x annual adjusted earnings, which already reflects a significant portion of negative expectations. According to the analysts, even a moderate normalization of the multiple could provide the shares with recovery potential.

Calvin Klein and Tommy Hilfiger may improve performance

Additional support for the share price could come from a rebound in results at Calvin Klein and Tommy Hilfiger. Analysts expect that improved e-commerce metrics and sales growth in lagging regions will contribute to more optimistic market expectations.

One of the key conditions for the idea to play out remains stabilization of PVH’s European business. Its weak momentum previously became one of the factors weighing on the company’s valuation.

The option premium could double

Freedom Broker suggests buying a call option on PVH shares with a $75 strike and an expiration date of December 18, 2026. The contract ticker is PVH.18DEC2026.C75. The premium at position opening is $6, or $600 per contract. The target exit price for the premium is set at $12. Thus, expected profit reaches $600, and the estimated return is 100%.

The breakeven point of the strategy is at $81 per share. Maximum profit is unlimited, while maximum loss is limited to the paid premium of $600. The recommended holding period is four to six weeks.

Weakness in the European business remains a risk

The main risks cited by analysts include continued weak performance by PVH in Europe, rising marketing expenses, and currency and trade factors. For the options position, an additional risk is time decay of the premium if the company’s shares continue to move in a sideways range.

Not an individual investment recommendation.