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Calvin Klein owner PVH's international potential is reason to buy the stock, JPMorgan says

  • PVH reported first-quarter adjusted earnings per share of $1.65, topping a Thomson Reuters forecast for $1.60.
  • The global apparel retailer's total sales came in at $2 billion for the latest period, also beating a Thomson Reuters consensus estimate of $1.96 billion in revenue.
  • JPMorgan has upped its rating on shares of the stock to overweight, with a new price target of $125.

PVH is a "rarity in retail," JPMorgan retail analyst Matt Boss told CNBC's "Halftime Report" on Thursday.

On Wednesday, the parent company of brands Calvin Klein and Tommy Hilfiger reported first-quarter earnings and revenue that topped Street estimates, and it raised its outlook for the full year — an uncommon move in the current retail environment.

The global apparel retailer reported first-quarter adjusted earnings per share of $1.65, topping a Thomson Reuters forecast for $1.60. PVH's total sales came in at $2 billion, increasing by 4 percent and also beating a Thomson Reuters consensus estimate of $1.96 billion in revenue.

Shares of PVH climbed a little more than 5 percent Thursday afternoon and are now up more than 7 percent for the week. PVH was the second-biggest gainer on the S&P 500 for the day, trailing only behind Best Buy.

The true bright spot for this company is its untapped international potential, Boss told CNBC.

The investment firm has just put an overweight rating on PVH shares, with a fresh price target of $125, up from $116. PVH's stock was last trading around $107 on Thursday, implying more than 15 percent upside potential.

"The story here is [PVH has] diversified their distribution ... 75 percent of their EBIT dollars come from outside the U.S.," Boss went on. "They've stabilized the U.S. marketplace, and international has a huge runway ahead."

The retail analyst believes PVH could triple its European business by way of Calvin Klein, and double its business in China through the Tommy Hilfiger nameplate. "I just think there's a number of ways to win," Boss said.

Tommy Hilfiger's international comparable sales climbed 14 percent during the latest period, but quarterly sales for this same segment in North America dropped 5 percent, the company reported Wednesday.

Meanwhile, Calvin Klein's international sales at established stores increased 3 percent for the first quarter, while North American revenues in the Calvin Klein business saw a decline of 1 percent.

"We continue to experience strong momentum in our Calvin Klein and Tommy Hilfiger businesses, which allowed us to exceed both our sales and earnings guidance for the first quarter despite the volatile macroeconomic environment and the highly promotional retail market in the U.S.," CEO Emanuel Chirico said in a statement.

He added that the company's first-quarter results still "underscored" the power of PVH's diversified business segments and the strength of its international marketplaces.

"They've stabilized in the U.S., and international can double from here," Boss reiterated during his CNBC interview. PVH understands where today's customer is shopping, he added, citing the fact the company has a huge presence on Amazon.com.

With the week's gains, PVH's stock has gained nearly 20 percent both for the year-to-date period and over the past 12 months. This, compared to the S&P 500's near 7 percent increase year-to-date.

PVH year-to-date performance

Source: FactSet