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Investing.com - Wells Fargo (NYSE:WFC) raised its price target on Levi Strauss & Co. (NYSE:LEVI) to $25.00 from $22.00 on Friday, while maintaining an Overweight rating following the company’s strong second-quarter performance.
The denim maker reported revenue growth of 6% versus the Street’s expectation of 1%, with upside across all channels and a 230 basis point margin beat. Despite incorporating a 20 basis point tariff impact, Levi raised its full-year EPS guidance by 5 cents. InvestingPro analysis reveals impressive gross profit margins of 60.82% and strong revenue growth of 7.23% over the last twelve months.
Levi’s performance showed strength across multiple segments, with women’s products growing 13%, tops increasing 15%, e-commerce rising 13%, and international sales up 10%, driven primarily by Europe and Latin America. The company has now posted 13 consecutive quarters of positive same-store sales, with high single-digit organic growth in the last three quarters. This consistent performance has contributed to LEVI’s strong financial health, earning a "GOOD" rating from InvestingPro, which highlights 10+ additional key insights available to subscribers.
Management quantified the expected tariff impact at 20 basis points to gross margins for the fiscal year, representing a 50 basis point total impact with 30 basis points of mitigation. Despite these headwinds, Levi maintained its full-year EBIT margin guidance at 11.4-11.6%.
The company expects third-quarter revenue growth of 3-4%, while maintaining what Wells Fargo characterized as a conservative outlook for the fourth quarter, with management citing prudence and caution in their planning despite not seeing any slowdown in consumer demand.
In other recent news, Levi Strauss & Co. reported a strong second quarter for 2025, significantly exceeding market expectations. The company posted earnings per share of $0.22, surpassing the projected $0.13, and reported revenue of $1.4 billion, which was above the forecasted $1.37 billion. This performance marks Levi Strauss’s third consecutive quarter of high single-digit growth in organic net revenue. The company also achieved a record gross margin of 62.6%, indicating effective cost management and strategic pricing. Following these results, Levi Strauss raised its fiscal year 2025 earnings guidance to $1.25-1.30 per share, up from the previous range of $1.20-1.25. Citi responded to the company’s robust performance by raising its price target for Levi Strauss to $22, maintaining a Neutral rating. The firm highlighted that the revised guidance might still be conservative, considering the company’s recent earnings beat. Despite challenges in the Asian market, Levi Strauss continues to see strong sales growth in Europe and the United States, driven by its direct-to-consumer business and product innovations.
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