JPMorgan Chase (JPM, Financials) upgraded Levi Strauss & Co. (LEVI, Financials) to Overweight from Neutral and lowered its price target to $17 from $19, citing a favorable valuation following a significant drop in the stock. Levi's shares have fallen 50% over the past nine months, compared with a 5% decline in the S&P 500 index over the same period.

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The bank's analyst, Matthew Boss, said the stock now trades at roughly five times projected fiscal 2026 earnings before interest, taxes, depreciation and amortization, or EBITDA. That multiple, combined with a 3.9% dividend yield, supports what Boss described as a potential mid-teens or higher total return profile over multiple years.

Levi Strauss reported $6.36 billion in revenue over the last 12 months, a 2.85% increase from the prior period. For the first quarter of fiscal 2025, the company reported earnings per share of $0.38, exceeding expectations of $0.28. Revenue rose 9% year over year to $1.53 billion but came in slightly below Wall Street forecasts. Direct-to-consumer sales increased 12% and now account for 52% of total revenue. The gross margin for the quarter hit a record 62.1%.

Boss credited Chief Executive Officer Michelle Gass with driving steady global demand growth over the past four quarters, particularly among 18- to 30-year-old customers. These consumers have been purchasing at higher average unit prices and with greater frequency, supporting brand momentum.

Profitability improvements were also attributed to Levi's shift from wholesale to direct-to-consumer operations, reduced discounting, and the exit from lower-margin businesses such as Denizen, European footwear, and Dockers. The company's gross margin expanded by 370 basis points over the last year, reaching 60.04%, according to InvestingPro data.

Levi's supply chain spans 20 countries, with only 1% of U.S. sourcing originating from China. The company experienced negligible effects from tariffs in 2018 and 2019, Boss said, and maintains a current ratio of 1.42, with sufficient cash flows to cover interest obligations.

Separately, analysts at Stifel maintained a Buy rating on Levi Strauss but cut their price target to $20 from $25. While acknowledging the company's strong financial performance, they cited potential earnings risks in 2026 if new tariffs are enacted or if consumer demand weakens. Stifel projected a high-single-digit percentage decline in earnings under such scenarios.

Levi reaffirmed its full-year guidance, expecting organic net revenue growth of 3.5% to 4.5% in the second quarter and a slight increase in gross margin, despite ongoing macroeconomic and trade-related uncertainties.