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Levi Strauss

Levi Strauss & Co, an American clothing company known for its Levi’s brand of denim jeans, reported better-than-expected earnings and revenue in the first quarter of 2021 and raised its half-year revenue growth guidance on assumption that there will be no significant worsening of the COVID-19 pandemic or dramatic incremental closure of global economies.

The world’s largest maker of pants said net revenues fell 13% year-over-year to $1.3 billion but beat Wall Street consensus estimates of $1.25 billion. Adjusted Diluted EPS came in at $0.34, beating analysts’ estimates of $0.25 per share.

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Levi Strauss raised its fiscal first-half 2021 reported net revenues outlook to 24-to-25 percent growth compared to the first half of 2020 and raised its first-half adjusted EPS forecast to 41-to-42 cents.

The company also declared and paid a dividend of $0.04 per share in the first quarter totaling nearly $16 million. In April 2021, the company increased the dividend to $0.06 per share for the second quarter totaling about $24 million.

Following this, Levi Strauss’ shares, which surged more than 4% in 2020, rose about 5% to $26.22 on Friday.

Analyst Comments

“We come away from 1Q21’s beat incrementally positive as Levi Strauss (LEVI) appears on track to deliver its 12%+ adj. EBIT margin target by 2022. Raising 1H21 estimates even with ongoing COVID-19-related headwinds as underlying business momentum prevails. Raising price target to $28 from $25 & reiterate Overweight,” noted Kimberly C Greenberger, equity analyst at Morgan Stanley.

“1Q21’s significant beat and raise and encouraging 2QTD trends prove management’s key strategic priorities are working, in our view. In fact, 1Q21’s outsized 13.3% adj. EBIT margin result, or 12.6% excluding 70 bps of transitory FX tailwinds, confirms that management’s 12% adj. EBIT margin target is not only attainable on normalized revenue levels, but beatable. As such, we leave the print incrementally positive on LEVI’s long-term revenue and margin expansion opportunity. With the stock trading at a discount to peers (11.5x FY22 EV/EBITDA vs. 14x peer average), we see an opportunity for the stock to re-rate further.”

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Levi Strauss Stock Price Forecast

Five analysts who offered stock ratings for Levi Strauss in the last three months forecast the average price in 12 months of $30.00 with a high forecast of $34.00 and a low forecast of $25.00.

The average price target represents a 14.55% increase from the last price of $26.19. All of those five analysts rated “Buy”, according to Tipranks.

Morgan Stanley gave the base target price of $84 with a high of $96 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weight” rating on the medical technology company’s stock.

Several other analysts have also updated their stock outlook. UBS raised the stock price forecast to $34 from $29. Evercore ISI lifted the target price to $30 from $26. Guggenheim increased the price target to $29 from $26. Citigroup upped the price objective to $29 from $25. JP Morgan raised the price target to $29 from $24. Telsey Advisory Group lifted the price target to $27 from $24.

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