Levi Strauss (LEVI) is checking a lot of encouraging boxes due to its sales momentum combined with a conservative revenue outlook, as well as "minimal" risk related to China in terms of sourcing and sales, BofA Securities said in a note Thursday.
Additionally, the company has an "improving wholesale trajectory, a diversified supply chain, and a strong balance sheet," the note said.
Levi's guidance could prove conservative as it's calling for net organic sales growth of 3% to 4% in fiscal 2025 compared with 9% growth in Q1, BofA said, adding the brand has "momentum in both its core denim business and its emerging lifestyle (non-denim) business."
Meanwhile, even if volatility around tariffs ensues in coming months, the company is "well positioned," the note said adding that "China production is minimal and only 40% of sales come from the US."
BofA upgraded Levi's to buy from neutral and raised the company's price target to $20 from $17, citing the fact that its shares are "down 38% from last year's highs" and the "positives outweigh the incremental risks at 6x EV/EBITDA."
Price: 14.22, Change: -0.71, Percent Change: -4.76
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