Levi stock at risk as Citi highlights weak 2025 sales and EPS expectations

On Friday, Citi analysts adjusted their outlook on Levi Strauss & Co. (NYSE:LEVI) by reducing the price target from $21.00 to $19.00, while maintaining a Neutral rating on the stock. The revision reflects expectations of the company's fourth-quarter sales and earnings per share (EPS) to align closely with consensus estimates and guidance. Citi's projection stands at $0.48 for the EPS, matching the consensus and slightly above the company's guidance of approximately $0.47.

Analysts at Citi anticipate a sales increase of 5.4%, which is slightly higher than the consensus of 5.2% and aligns with the company's guidance of mid-single-digit growth. The direct-to-consumer (DTC) channel is expected to have remained robust globally, benefiting from ongoing fashion trends, including looser fits and the impact of the Beyonce campaign that launched in October.

With impressive gross profit margins of 59.09% and a solid financial health score according to InvestingPro, which offers 6+ additional insights about LEVI's performance, the company maintains strong operational efficiency despite wholesale channel challenges, which saw a 3% global decline in the third quarter and is only expected to show a relative improvement sequentially.

Looking ahead to 2025, Citi analysts predict that Levi Strauss's sales and EPS guidance will fall short of consensus expectations, partly due to foreign exchange headwinds. They forecast a sales growth range of 0.5-2.5%, compared to the consensus of 4.4%, and an EPS guidance of $1.25-1.35, which is below the consensus of $1.40. The Citi analyst noted, "Although we expect 4Q results to be fine, we believe disappointing 2025 could move the stock lower."

Levi Strauss & Co. has yet to respond publicly to the revised price target and maintained rating. The company's stock performance following the announcement will be closely watched by investors and market analysts alike.

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