On Thursday, UBS reiterated a Buy rating on shares of Levi Strauss & Co. (NYSE:LEVI), maintaining a $25.00 price target. The firm's outlook for the company remains positive, anticipating earnings per share (EPS) beats and solid growth to drive the stock toward the set price target. UBS believes that the market has yet to fully recognize Levi Strauss's capacity to capitalize on its reputable brand and investments in its direct-to-consumer (DTC) channel.
Despite facing headwinds related to distribution, marketing speed, and foreign exchange (FX) factors, Levi Strauss has maintained its fiscal year 2024 EPS outlook. UBS's thesis is still supported by the company's accelerating sales momentum and margin improvements demonstrated in the second quarter. The firm expects the company's competent execution to result in a 16% compound annual growth rate (CAGR) in EPS over the next five years.
UBS predicts that Levi Strauss will continue to surpass EPS expectations and that a modest price-to-earnings (P/E) expansion over the next twelve months (NTM) will propel the stock towards their $25 price target. This assessment comes as the company exhibits strong performance, which UBS believes should catalyze the stock's movement toward their projected valuation.
In other recent news, Levi Strauss & Co. has seen significant developments, starting with its financial performance. The company reported stronger-than-expected earnings, with revenue of $1,558 million and adjusted earnings per share of $0.26. However, sales slightly missed market forecasts, leading to an adjustment in second-half guidance due to expenses linked to changes in distribution strategy and foreign exchange headwinds.
In the analysis by Citi, the firm maintained a neutral rating on Levi Strauss shares with a price target of $21. Stifel and TD Cowen showed more optimism, with Stifel increasing its price target for Levi Strauss from $24 to $28 and TD Cowen raising its target from $23 to $26. Both firms maintained a Buy rating, with TD Cowen highlighting Levi's as a top pick among small to mid-cap companies.
Other recent developments include a workforce reduction trend that Levi Strauss has joined, as seen across North American firms. On a brighter note, the company has appointed Gianluca Flore as its new Executive Vice President and Chief Commercial Officer, aiming to expand its direct-to-consumer sales and international presence.
These developments provide investors with an insight into the company's current trajectory.
InvestingPro Insights
Levi Strauss & Co. (NYSE:LEVI) has demonstrated a robust financial performance, with several key metrics underscoring the company's solid position. According to real-time data from InvestingPro, Levi's market capitalization stands at a sturdy $9.2 billion, and while the company is trading at a high earnings multiple with a P/E ratio of 24.74 for the last twelve months as of Q1 2024, this reflects the market's confidence in its future earnings potential. Additionally, the company's revenue for the same period was $6.047 billion, despite a slight revenue decline of 3.48%.
From an investment standpoint, Levi Strauss has raised its dividend for five consecutive years, signaling a commitment to returning value to shareholders. Moreover, the company's liquid assets exceed its short-term obligations, indicating a healthy liquidity position. An InvestingPro Tip to note is that analysts predict Levi Strauss will be profitable this year, which aligns with the positive outlook from UBS. Furthermore, the company has seen a strong return over the last three months, with a 20.01% price total return, reinforcing the positive sentiment around the stock.
For investors seeking deeper insights and additional tips, InvestingPro offers a comprehensive list of metrics and analyses. There are 5 more InvestingPro Tips available for Levi Strauss, which can be accessed by visiting: https://www.investing.com/pro/LEVI. To enhance your investment research on Levi Strauss & Co., use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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