On Tuesday, UBS analyst Jay Sole confirmed a continued Buy rating and a $20.00 price target for Levi Strauss & Co. (NYSE:LEVI), following the company's recent financial performance. Sole highlighted that Levi Strauss outperformed expectations with a $0.10 earnings per share (EPS) beat for the first quarter of 2025. The positive results were attributed to stronger-than-anticipated revenue growth and gross margins, marking one of the company's most successful quarters in recent years.
Despite concerns about tariffs impacting the apparel industry, Sole believes that Levi Strauss is well-equipped to handle such challenges due to its robust global supply chain network. The company maintains impressive gross profit margins of 60.04%, demonstrating strong operational efficiency. This network is considered superior to those of many competitors, potentially giving Levi Strauss a significant advantage.
Sole also noted Levi Strauss's effective management of elements within its control and the brand's ongoing transformation. The company has been transitioning from a primarily North American, wholesale-focused men's denim brand to a global, multi-channel lifestyle brand catering to both men and women. This strategic shift is expected to continue driving market share gains in the long term.
Looking ahead, UBS projects a promising outlook for Levi Strauss, forecasting an approximate 11% compound annual growth rate (CAGR) in EPS over a five-year period, from fiscal year 2024 to fiscal year 2029. This forecast underscores the firm's confidence in Levi Strauss's growth trajectory and operational strategy. InvestingPro analysis reveals additional positive indicators, including six consecutive years of dividend growth and strong cash flows. Discover 12 more exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription.
In other recent news, Levi Strauss & Co. reported a strong first quarter for fiscal year 2025, with earnings per share (EPS) of $0.38, surpassing the forecasted $0.28. The company's revenue reached $1.53 billion, marking a 9% year-over-year increase, although it fell slightly short of expectations. Levi Strauss also achieved a record gross margin of 62.1%, driven by a shift towards direct-to-consumer sales and higher full-price selling. Stifel analysts revised their price target for Levi Strauss to $20 from $25, maintaining a Buy rating due to the company's accelerated organic revenue growth and effective brand-building strategy. However, they expressed concerns about potential tariff impacts that could affect future earnings. Meanwhile, JPMorgan upgraded Levi Strauss' stock rating from Neutral to Overweight, despite lowering the price target to $17 from $19, citing the stock's attractive valuation and growth potential. The company has shown consistent global demand growth, particularly among younger consumers, and has reduced its reliance on China for sourcing.
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