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Investing.com -- Levi Strauss & Co Class A (NYSE:LEVI) reported solid first-quarter results on Tuesday, with earnings and revenue, ex-discontinued operations, beating analyst estimates. JPMorgan analysts upgraded the stock following the report.
The iconic denim maker's shares surged more than 14% in premarket trading Tuesday.
Levi Strauss posted adjusted earnings per share of $0.38 for the quarter ended March 2, 2025, surpassing the analyst consensus of $0.28. Revenue came in at $1.53 billion, just below the $1.54 billion analysts had projected. However, adding back in the $67 billion from Dockers, which was moved to discontinued operations, revenue beat the consensus.
The company reported net revenues up 3% on a reported basis and 9% on an organic basis compared to the same quarter last year. The Levi's brand saw 8% global organic growth.
"We exceeded revenue and profitability expectations in Q1 marking a strong start to the year, another proof point that our transformation strategy is working," said Michelle Gass, President and CEO of Levi Strauss & Co.
Levi Strauss maintained its full-year 2025 guidance, projecting adjusted earnings per share of $1.20 to $1.25. This outlook includes an approximate $0.20 impact from foreign exchange and a higher tax rate but excludes any potential effects from recently announced tariffs.
The company's gross margin expanded 330 basis points to 62.1%, driven by lower product costs and favorable channel and brand mix. Adjusted EBIT margin increased 400 basis points to 13.4%.
Levi Strauss returned approximately $81 million to shareholders in the first quarter, including $51 million in dividends and $30 million in share repurchases.
Following the report's release, JPMorgan upgraded Levi Strauss to Overweight from Neutral, while trimming its year-end price target to $17 from $19.
The upgrade comes as the macro-driven pullback in LEVI shares of roughly 50% over the past nine months provides "an entry point." At around 5x its fiscal 2026 EBITDA, analysts see potential for a "multi-year" total return profile in the mid-teens or higher.
Luke Juricic contributed to this report.