"Too cheap": Wells Fargo analysts issue buy ratings on two stocks

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PVH

EUR 75.00
-2.60%

• Analysts rate two stocks as “too cheap”.
• Wells Fargo analyst Ike Boruchow rates PVH stock “Overweight”
• Wells Fargo analyst Edward Kelly rates BJ stock “Overweight”

Wells Fargo analysts have two values ​​in mind

Finding the best stocks in the stock market is no easy task. While some stocks trade at comparatively cheap prices, that doesn’t necessarily mean they’re the best picks to buy. Recommendations from Wall Street experts who deal with the analysis of stocks and companies at established financial institutions can therefore be helpful when making a purchase decision. For example, as TipRanks reports, analysts at Wells Fargo recently targeted two stocks they call “too cheap” at current levels. TipRanks ran these two stocks through their database to see how other Wall Street pundits rate their chances.

PVH Corp.

The first stock targeted by Wells Fargo experts is PVH. The company is a US clothing company based in New York City. The company includes the cult brands Calvin Klein and TOMMY HILFIGER. In total, the group employs around 27,000 people in more than 40 countries and operates through various sales channels, including retail stores, e-commerce platforms and wholesale partnerships. The company was able to complete the first quarter of the current year quite successfully. As can be seen from the quarterly report, sales rose by two percent year-on-year to a total of 2.158 billion US dollars. Earnings per share for the first quarter were $2.14. With these results, the company far surpassed consensus estimates, according to TipRanks. However, shares were reeled by a disappointing outlook for the second quarter. The full-year growth forecast of three to four percent was also below the consensus estimate, which predicted an increase of 3.76 percent. Nevertheless, the PVH share has been up a good 19 percent since the beginning of the year and most recently cost 82.31 US dollars in NYSE trading (as of: closing price: June 20, 2023).

But while investors weren’t exactly thrilled with the forecast, Wells Fargo analyst Ike Boruchow sees potential for the company’s stock, according to TipRanks. In his opinion, PVH is “a rare name that has weathered the difficult macroeconomic conditions well”. He also believes investors should take advantage of a tempting entry point here. “The momentum is evident, the multiple remains too cheap. PVH is bucking the trend – with international growth and a recovery in the US driving results. Better demand trends and rising margins are an outlier today and it’s clear that “PVH’s supply chain, branding and distribution strategies are gaining momentum. We remain very bullish on this idiosyncratic turnaround story,” said Boruchow. For this reason, the analyst rates PVH shares as “Overweight” and sets his target price at $110, which promises upside potential of around 29 percent. But other Wall Street pundits also see some potential in the stock. Seven other analysts rate the stock with a moderate buy recommendation.

BJ’s Wholesale Club Holding

The second stock is BJ’s Wholesale Club. This is an American warehouse club chain based in Marlborough, Massachusetts, whose business is primarily focused on the east coast of the United States. The main focus of the department stores’ assortment is on a wide range of products such as groceries, constantly updated general goods, petrol and additional services. Since introducing the model in 1984, the company has expanded its presence to large-scale, high-volume warehouse clubs in 19 states. And although the company’s concept is designed to survive in difficult economic times, the latest quarterly report showed that the first quarter of 2023 was not entirely convincing. Compared to the same period last year, sales grew by five percent to 4.72 billion US dollars. Still, the result fell a full $90 million short of analyst estimates, according to TipRanks. Earnings per share increased 3.7 percent to $0.85. Since the publication of the quarterly report, the shares have mostly traded sideways. BJ shares were last seen in NYSE trading at $61.23 (closing price: June 20, 2023).

Wells Fargo analyst Edward Kelly explains the current development of the stock with “growing concerns about future dynamics”. While these concerns are understandable, he believes the stock is “too cheap,” reports TipRanks. BJ would have the same problem as most of its peers: Industry fundamentals are simply declining. “Consumer weakness weighs on trades as the historic grocery pricing cycle comes to an end. This clearly creates problems for the momentum of defensive staple retailers. Still, BJ should be a stock-performing model, has a good self-help story and is growing traded on a compelling factor. We remain overweight as this overall picture should ultimately prevail,” said the analyst. In addition to an Overweight rating, Kelly also has a target price of $83. This predicts a 33 percent increase in the stock. In addition to Kelly, other experts are also positive. Of a total of 14 other reviews posted in the last three months, nine join Kelly in the bull camp, four remain on the sidelines and one calls for a sell. Overall, this results in a moderate buy consensus rating.

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