On Thursday, Citi reaffirmed its Neutral rating and a $21.00 price target for Levi Strauss & Co . (NYSE:LEVI) stock, anticipating the company's third-quarter sales and earnings per share (EPS) to align with consensus estimates and guidance.
Citi's projections are slightly below consensus, with an EPS estimate of $0.30 compared to the consensus of $0.31 and the company's guidance of approximately $0.30. The firm expects Levi's sales to increase by 2.3%, which is slightly below the consensus forecast of a 2.7% rise.
The direct-to-consumer (DTC) channel is expected to remain robust globally, supported by ongoing fashion trends, including looser fits and the popularity of denim tops and skirts.
However, wholesale performance, which declined by 4% globally in the second quarter, is thought to remain relatively weak, although it may show sequential improvement. Citi notes that Levi's guidance does not anticipate growth in U.S. or European wholesale in the second half of the year.
Citi anticipates that Levi Strauss management will tighten its full-year earnings guidance, narrowing the range to $1.22 to $1.27 from the previous range of $1.17 to $1.27, which is close to the consensus estimate of $1.25.
According to Citi, market expectations are not high ahead of the earnings call, unlike the previous quarter, and it is believed that results meeting expectations are unlikely to significantly impact the stock's movement.
The analysis by Citi suggests a steady outlook for Levi Strauss as the market heads into the company's earnings announcement, with no significant changes expected in stock performance based on the projected in-line financial results.
In other recent news, Levi Strauss & Co. experienced a series of significant developments. The company reported a 9% rise in constant currency revenue and record gross margins of 60.5% for Q2 2024, despite a decline in the global wholesale business. This financial health was supported by an adjusted diluted earnings per share of $0.16, exceeding expectations.
In addition, Levi Strauss announced an executive transition with Tracy Layney, Executive Vice President and Chief Human Resources Officer, set to leave her role in October 2024. The company has yet to announce a successor.
Furthermore, Levi Strauss adjusted its timeline for achieving its revenue goal of $9 billion to $10 billion, initially set for 2027, without providing a new timeline or reasons for this delay.
Analysts from Stifel, TD Cowen, and UBS maintained a Buy rating on the company, with Stifel and TD Cowen raising their price targets. Stifel expressed confidence in the company's shares due to positive direct-to-consumer demand signals and a reduction in foreign exchange pressures. TD Cowen highlighted Levi Strauss's globally diversified growth and direct-to-consumer initiatives as beneficial.
Lastly, political unrest in Bangladesh, the third-largest clothing exporter globally, has led to the closure of garment factories, potentially disrupting supply chains for companies like Levi Strauss. These recent developments provide investors with an insight into the company's current trajectory.
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