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On Tuesday, Stifel analysts maintained a Buy rating on Levi Strauss & Co . (NYSE:LEVI) with a steady price target of $20.00. The decision follows the company’s recent move to sell its Dockers Brand for $311 million, a transaction that analysts note aligns with Levi’s strategy to concentrate on more profitable and faster-growing segments. Stifel views the sale as a positive step, fetching a price that is nearly equivalent to 1x EV/Sales and considering the Dockers brand was only breaking even on earnings.
The sale of Dockers comes after Levi Strauss & Co. explored strategic alternatives in the fourth quarter of 2024 and subsequently treated the brand as discontinued operations in the first quarter of 2025. Stifel highlights Levi’s potential for mid-single-digit percentage organic revenue growth on a constant currency basis. This growth is anticipated to support the expansion of operating margins, which were reported at 10.7% for the fiscal year 2024.
Levi Strauss & Co.’s plans to allocate approximately $100 million from the Dockers sale to share repurchases are expected to enhance the company’s earnings. Stifel estimates an incremental $0.01 to fiscal year 2025’s earnings per share, with an additional $0.02 contribution projected for fiscal year 2026. This buyback program is noted to represent about 1.4% of the market capitalization of Levi.
Stifel also addressed the potential impact of tariffs on the valuation, considering a hypothetical scenario where tariffs could reduce fiscal year 2026 earnings by $0.18. This assumption is based on a 10% blanket tariff and a 30% rate on goods from China. Despite this, the firm reaffirms its $20 price target, which implies a price-to-earnings (P/E) ratio of 14.9 times based on pro forma fiscal year 2026 earnings power of $1.34, or 13.3 times P/E on the published earnings estimate of $1.50.
In other recent news, Levi Strauss & Co. has announced the sale of its Dockers brand to Authentic Brands Group for an initial sum of $311 million, potentially increasing to $391 million based on Dockers’s future performance. This strategic move is part of Levi’s focus on its direct-to-consumer strategy and international expansion. The transaction is expected to close around July 31, 2025, for operations in the U.S. and Canada, with the remainder finalizing by January 31, 2026. Levi Strauss plans to use approximately $100 million from the sale proceeds for stock repurchase. In a separate development, Levi Strauss disclosed an executive transition, with Lisa Stirling moving to Vice President, U.S. and Canada Finance, while maintaining her current role until a successor is found. Additionally, Wells Fargo (NYSE:WFC) analyst Ike Boruchow upgraded Levi Strauss’s stock rating from Equal Weight to Overweight, raising the price target to $20, citing the company’s strong brand power and minimal exposure to China. These developments reflect Levi Strauss’s strategic positioning and recent performance in the current economic climate.
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