On Thursday, Stifel, a financial services firm, increased its share price target for Levi Strauss & Co. (NYSE:LEVI) to $24 from the previous $17 while maintaining a "Buy" rating on the stock.
The adjustment follows Levi's reported revenue of $1,558 million and an adjusted earnings per share (EPS) of $0.26, which exceeded Stifel's projections by $20 million and $0.05, respectively.
Levi's financial performance has shown a promising start to fiscal year 2024, with the company's earnings outlook for the year being slightly revised upward to a range of $1.17 to $1.27 from the prior forecast of $1.15 to $1.25.
This update reflects Levi's reaffirmed revenue growth projection of 1-3% and a modest increase in its gross margin guidance, now expected to grow by 150 basis points year-over-year compared to the previously stated range of 140-150 basis points.
The company's product diversification efforts appear to be paying off, with denim dresses and skirts sales experiencing triple-digit year-over-year growth. This indicates Levi's effective capitalization on current fashion trends. Additionally, the company's Project Fuel initiatives are on track to meet the $100 million cost savings target for fiscal year 2024, with potential for greater savings in fiscal year 2025.
In light of these developments, Stifel has modestly raised its revenue and earnings estimates for Levi Strauss, positioning them towards the higher end of the company's guidance range. The new price target of $24 reflects a 16 times price-to-earnings (P/E) ratio based on Stifel's adjusted EPS estimate of $1.50 for fiscal year 2025, and an 11 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio.
InvestingPro Insights
As Levi Strauss & Co. (NYSE:LEVI) navigates through fiscal year 2024 with a positive adjustment in its earnings outlook and a continued focus on product diversification, InvestingPro data and insights provide additional context for investors. With a market capitalization of $7.43 billion and a noteworthy price-to-earnings (P/E) ratio adjusted for the last twelve months as of Q4 2023 at 18.49, the company's valuation metrics are of interest. The company's revenue growth for the last twelve months stands at a modest 0.17%, with a more significant quarterly growth rate of 3.37% in Q4 2023, reflecting a steady upward trajectory.
InvestingPro Tips highlight Levi's commendable financial management, with liquid assets surpassing short-term obligations and a moderate level of debt, suggesting a stable financial position. Additionally, the company has raised its dividend for five consecutive years, which, coupled with a dividend yield of 2.57% as of early 2024, may appeal to income-focused investors. Analysts predict profitability for the year, and with a strong return over the last three months, the stock has seen a significant price uptick, with a six-month total return of 41.16%.
For those seeking more detailed analysis and additional InvestingPro Tips, there are 6 more tips available on InvestingPro's platform for Levi Strauss & Co. Interested readers can explore these insights and consider using the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With the company's next earnings date on April 3, 2024, investors will be watching closely to see if the positive trends continue.
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