On Thursday, BofA Securities analyst Christopher Nardone upgraded Levi Strauss & Co (NYSE:LEVI) from Neutral to Buy rating and raised the price forecast from $17.00 to $20.00.
The analyst cited the stock's 38% drop from last year as a compelling entry point and highlighted Levi's strong sales trends, conservative revenue guidance, low exposure to China, and improving wholesale performance.
With a solid balance sheet and diversified supply chain, the analyst raised the price forecast, applying an 8x multiple on fiscal 2026 EV/EBITDA.
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The analyst views LEVI as a standout brand in uncertain times, thanks to its growing global appeal and dominant position in the denim market.
The company is expanding beyond denim into categories like dresses, skirts, and outerwear, aiming to increase its reach in women's apparel.
A partnership with Beyoncé continues to fuel brand buzz, while strong direct-to-consumer trends in key regions suggest global market share gains.
LEVI delivered a strong fiscal first quarter, with solid holiday sales driving improved revenue and margins. Net organic sales excluding FX, Denizen, footwear, and extra weeks rose 9%, though growth tapered as the quarter progressed.
Management reiterated its 3–4% annual growth outlook, which the analyst views as cautious. Encouragingly, March trends rebounded, and the margin trajectory appears well-positioned against peers forecasting stronger second-half recoveries.
LEVI's wholesale segment is showing positive momentum, with two straight quarters of U.S. growth. In Europe, first-quarter wholesale declined due to distribution center transitions, but order book strength suggests a return to growth in the second quarter.
LEVI is temporarily benefiting from a 90-day tariff reprieve, but the company appears resilient if trade tensions flare again, the analyst observed.
With limited exposure to China in its production and just 40% of sales tied to the U.S., LEVI is insulated from significant disruption.
LEVI's strong balance sheet is a key advantage amid economic uncertainty. With net leverage at just 0.2x, the company is in a far better position than many peers.
This financial flexibility allows LEVI to maintain dividends, continue share buybacks, and reinvest in growth positioning it well should macro conditions worsen, said the analyst.
Price Action: LEVI shares closed lower by 2.75% to $14.52 on Thursday.
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