Leading jeanswear company Levi Strauss & Co. (NYSE:LEVI) will announce its first quarter financial results on Thursday, April 6. However, UBS analyst Jay Sole expects the company to miss Q1 earnings expectations due to the weakness in the domestic market and higher expenses. Sole has a Buy recommendation on LEVI stock, and his price target of $21 implies an upside of about 15% from the current levels.
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Q1 Earnings to Decline
Wall Street expects LEVI to post revenue of $1.62 billion in Q1 compared to $1.59 billion in the prior-year quarter. It’s worth highlighting that LEVI has surpassed analysts’ sales estimates 75% of the time in the past 12 months, compared to the industry average of 64.32%.
Strength in the Direct-to-Consumer channel and a diversified business model support its top-line growth. However, Sole expects continued weakness in the Wholesale segment in the U.S. and Europe to remain a drag.
The analyst expects LEVI’s bottom line to take a hit from higher promotions. He expects the company to post earnings two cents lower than the Street’s consensus estimate. Analysts expect Levi Strauss to report earnings of $0.32 a share, down from $0.46 reported in Q1 of fiscal 2022.
While Sole expects Levi Strauss to disappoint in Q1, he maintains a bullish outlook on the stock. The analyst expects Levi Strauss to continue to gain market share in the jeanswear segment and sees acceleration in international sales beyond 2023. Moreover, Sole expects the company to retain its 2023 guidance despite a weak Q1.
For fiscal 2023, LEVI expects to deliver revenue in the range of $6.3 billion and $6.4 billion. Meanwhile, it projects adjusted EPS in the range of $1.30 to $1.40, down from $1.50 in fiscal 2022.
While LEVI’s earnings are expected to decline year-over-year, let’s check what Wall Street recommends for its stock.
Is LEVI a Good Stock to Buy Now?
LEVI stock has received four Buy and four Hold recommendations, translating into a Moderate Buy consensus rating on TipRanks. Meanwhile, analysts’ average price target of $19.50 implies 6.97% upside potential.
