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Investing.com -- Needham & Company initiated coverage of Levi Strauss with a Buy rating and a $28 price target, highlighting the brand’s strong execution and its position as a key beneficiary of a long-lasting denim revival.
“We believe the company is executing well on its strategic initiatives (omnichannel growth, category diversification), while also benefiting from a strong denim trend, which we believe could have a long duration (more ‘generational’ than trend-based),” Needham wrote.
The analysts argued that Levi’s stands out as demand shifts away from athleisure.
“Denim is seeing a surge in popularity, and there’s probably no brand more closely associated with denim than Levi’s,” they said.
According to the firm, Gen Z consumers, today’s fashion leaders, are favouring baggy jeans, setting up a durable cycle similar to the Millennial-driven rise of athleisure.
Needham also pointed to broader cultural factors. “The ‘Western’ trend also helps LEVI, and the company even had a song named after them on last year’s ‘Cowboy Carter’ album by Beyoncé,” analysts said, adding that Levi’s collaboration with the Grammy-winning artist further reinforced its relevance.
At the same time, the firm praised management’s focus. Levi’s has exited non-core categories like wholesale footwear and Dockers, while shifting toward a true omnichannel model and expanding in women’s and tops.
Needham noted Levi’s posted 9% organic revenue growth and more than 300 basis points of EBIT margin expansion in the first half of the year.
However, they added that second-half guidance assumes flat to low-single-digit growth and modest margin pressure. “Given the momentum in the business … this seems like a highly conservative outlook that LEVI has potential to beat,” the analysts concluded.