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On Tuesday, Stifel analysts reiterated their Hold rating and maintained a $72 price target on Kontoor Brands (NYSE: NYSE:KTB) stock, currently trading at $69.57. According to InvestingPro analysis, the stock appears undervalued based on its proprietary Fair Value model. The company boasts a perfect Piotroski Score of 9, indicating strong financial health. The reaffirmed rating follows the company’s recent acquisition of Helly Hansen, which was finalized on Monday.
The acquisition is expected to diversify Kontoor Brands’ portfolio, shifting focus from its traditional bottoms business to higher-growth markets, particularly in the outdoor sector. With a healthy current ratio of 2.78 and operating with moderate leverage, the company appears well-positioned for this expansion. This move is seen as a positive step towards enhancing the company’s market presence and growth potential. InvestingPro subscribers can access detailed analysis of Kontoor’s acquisition strategy and 10+ additional exclusive insights.
Stifel provided updated estimates reflecting the inclusion of Helly Hansen’s impact on Kontoor Brands’ financial statements. They anticipate a pro forma net leverage ratio of 2.5x, with a potential reduction to below 2x by mid-2026.
The analysts also noted that their model accounts for the effects of tariffs beginning in the second half of 2025, contrasting with Kontoor Brands’ guidance that excludes such impacts estimated at $50 million before mitigation efforts.
The $72 price target is based on a 13.0x multiple of the company’s projected 2026 adjusted earnings per share of $5.55, and a 9.7x enterprise value to EBITDA ratio on the 2026 adjusted EBITDA estimate of $519 million.
In other recent news, Kontoor Brands has completed its acquisition of Helly Hansen, a strategic move aimed at diversifying its portfolio and strengthening its foothold in the outdoor and workwear markets. This acquisition is expected to have an immediate positive impact on Kontoor’s revenue, adjusted earnings per share, and cash flow for the fiscal year 2025. Additionally, Kontoor Brands reported first-quarter earnings that exceeded Wall Street expectations, with adjusted earnings per share of $1.31, marking a 13% increase year-over-year. However, the company posted a slight revenue decline to $622.9 million, just below the forecast of $626.3 million.
Barclays (LON:BARC) analyst Adrienne Yih has raised the price target for Kontoor Brands to $86, up from $75, maintaining an Overweight rating. The increase in the price target reflects anticipated synergies with the recently acquired Helly Hansen. Kontoor Brands has also projected full-year revenue between $3.060 billion and $3.090 billion, with Helly Hansen expected to contribute $425 million. The company anticipates adjusted EPS for the year to range from $5.40 to $5.50. Investors will be closely monitoring how these developments influence Kontoor’s financial performance and market position in the coming years.
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