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On Tuesday, Kontoor Brands (NYSE:KTB) received a positive assessment from Goldman Sachs, as the firm reinstated coverage on the apparel company’s stock with a Buy rating and an $85.00 price target. The new rating reflects a 25% potential upside from Kontoor Brands’ recent trading levels. The company maintains strong financial fundamentals with a perfect Piotroski Score of 9 and healthy liquidity, as shown by its current ratio of 2.78x. According to InvestingPro analysis, the stock appears to be trading below its Fair Value.
Goldman Sachs’ analyst Brooke Roach provided insights on the company’s strategic moves, highlighting the recent acquisition of the Helly Hansen brand. According to Roach, this acquisition diversifies Kontoor Brands’ portfolio and enhances its expansion into global markets, specifically within the outdoor, active, and outerwear categories. The analyst believes this move offers a meaningful opportunity for accretion over time. With a solid gross profit margin of 45.6% and consistent dividend growth over the past four years, the company shows strong operational execution. Discover more insights about KTB and 1,400+ other stocks with InvestingPro’s comprehensive research reports.
The analyst also pointed out the healthy underlying trends in Kontoor Brands’ base business, particularly with the Wrangler brand, which could contribute to the company’s growth. The integration of the Helly Hansen brand is seen as a significant growth optionality for Kontoor Brands.
Moreover, Goldman Sachs noted that Kontoor Brands’ positioning is relatively attractive due to the current tariff policy. This factor, combined with the company’s business developments, contributes to the firm’s favorable outlook on Kontoor Brands’ stock.
The reinstatement of coverage by Goldman Sachs and the setting of a new price target come as Kontoor Brands continues to make strategic moves to strengthen its market position and expand its brand portfolio, aiming for long-term growth and market penetration.
In other recent news, Kontoor Brands reported first-quarter earnings that exceeded expectations, with adjusted earnings per share reaching $1.31, a 13% increase from the previous year, despite a slight revenue miss at $622.9 million. The company recently completed its acquisition of Helly Hansen, an outdoor and workwear brand, which is anticipated to diversify Kontoor’s portfolio and contribute positively to its 2025 revenue and earnings. Barclays (LON:BARC) analysts have raised their price target for Kontoor Brands to $86, maintaining an Overweight rating, citing confidence in the company’s strategic plans and growth opportunities. Meanwhile, Stifel analysts reiterated their Hold rating with a $72 price target following the acquisition, projecting a pro forma net leverage ratio of 2.5x. Kontoor’s CEO, Scott Baxter (NYSE:BAX), expressed optimism about the integration of Helly Hansen, expecting it to enhance growth and shareholder value. The acquisition aligns with Kontoor’s strategy to expand into new market segments, with Helly Hansen expected to contribute $425 million in revenue for the fiscal year. Additionally, Kontoor Brands projects full-year revenue growth of 17-19%, with adjusted EPS anticipated between $5.40 and $5.50.
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