Stock Analysis & Ideas

Levi Strauss Solidifies Position with Denim Offerings

Levi Strauss (LEVI) is a well-known apparel brand that sells jeans, casual clothing, footwear, and other accessories.

The corporation recently published strong fiscal first-quarter 2022 financial results. Based on the strong demand environment, Levi Strauss CEO Chip Bergh maintained his full-year 2022 expectations.

The stock, on the other hand, hasn’t had a particularly good year. LEVI has dropped by 24% so far this year, and by 29% over the past 12 months.

Robust Q1 Financials

Net revenues increased 22% to $1.6 billion. A resurgence in denim demand fuelled the company’s top-line growth.

Furthermore, increased sales assisted in mitigating the impact of higher costs. Meanwhile, earnings per share increased 35% year-over-year to $0.46 per share.

During the first quarter, the business also declared a dividend of about $40 million and repurchased a total of 3 million shares.

These financial results suggest that the corporation may be able to return more cash to shareholders in the future through increased dividend payments and stock buybacks.

Expert’s Thoughts

Following the strong Q1 results, all of the analysts featured on TipRanks assigned Levi Strauss a Buy recommendation.

One such analyst is Paul Lejuez of Citigroup, who feels that the company’s top and bottom-line statistics were boosted by growth in the United States and better-than-expected gross margins. He went on to say that despite price hikes, demand for Levis’ products remained strong in the first quarter.

Lejuez maintained a Buy rating but lowered his price target to $27 from $28 per share.

In addition, investors remain positive about Levis stock.

According to TipRanks’ Stock Investors tool, 13.4% of investors holding portfolios on TipRanks have increased their stake in Levi Strauss stock in the last 30 days. Furthermore, 9.1% of these individuals have increased their holdings in the past week.

Bottom Line

Levis has adapted to changing customer preferences. The brand’s denim trend is still in high demand. Further, it has expanded its offerings beyond jeans in order to stay afloat. Taking these into account, Levi Strauss appears to be a solid long-term play.

Wall Street is bullish on the company, with a Strong Buy consensus rating based on 10 unanimous Buys. The average LEVI price target of $30.40 implies 62.1% upside potential to current levels.

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