Levi Strauss & Co (NYSE:LEVI) (LEVI) has a “substantial long-term global growth opportunity” but slowing US consumer spending will likely make it difficult for the company to positively surprise when it reports its second quarter results on July 6, UBS analysts wrote in a note to clients.
They have a ‘Buy’ rating on shares of the denim apparel maker with a 12-month target price of $22, believing Levi's will lower its fiscal year (FY) 2023 earnings per share (EPS) guidance range by $0.05 to $1.25 to $1.35.
“We think sentiment already leans bearish and this will keep Levi's P/E (price to earnings ratio) from sliding much even if the company lowers its FY23 EPS guide below the bar,” the analysts wrote, noting the short interest in the stock has increased to 13%, its highest level in over two years.
While the analysts stated that UBS Evidence Lab data revealed a mixed picture, with Amazon Best Seller data showing Levi continuing to lead the US men's and women's jeans category with over 25% market share while Google’s data indicating Levi's search trends across all geographies decelerated during 2Q, they expect Levi stock to outperform over the next 12 months.
Shares of Levi Strauss eased 0.7% to $14.40 in late-afternoon trading on Friday and are down 8% year to date.
Contact Sean at sean@proactiveinvestors.com