Levi Strauss & Co (NYSE:LEVI) is expected to deliver solid first-quarter results, though investors may need to remain patient as macroeconomic uncertainty clouds the outlook, according to a preview from Jefferies.
The broker forecasts earnings per share of $0.37 for the quarter, in line with market expectations and toward the upper end of the company’s guided range of $0.35 to $0.38. Jefferies said its estimates suggest a “modest upside bias,” supported by improving business trends and steady execution.
Alternative data points were mixed during the quarter, but Jefferies highlighted strengthening web traffic and rising consumer engagement, alongside continued momentum in key product categories such as baggy denim styles.
The firm also pointed to a spike in US social media engagement in February, driven in part by brand exposure during the Super Bowl.
Jefferies said organic sales growth could reach 7% to 8% year-over-year if Levi’s maintains its current trajectory, above its full-year guidance of 4% to 5% and ahead of Street expectations of roughly 5.1%. Gross margins could also outperform, potentially landing flat year-over-year versus the firm’s prior expectation for a slight decline.
Despite the expected solid quarter, Jefferies anticipates management will reiterate its full-year guidance, citing elevated macro volatility, particularly linked to rising oil prices. The firm noted that Levi’s has historically taken a cautious stance in uncertain environments, even after delivering earnings beats.
That caution could limit near-term upside in the stock, especially with consensus estimates already sitting at the higher end of the company’s guidance range. Analysts said stronger-than-expected first-quarter results or an upbeat second-quarter outlook would be needed to shift sentiment more positively.
Jefferies also flagged potential risks tied to higher oil prices, which could pressure demand and increase freight costs. Drawing on past periods of inflation and supply chain disruption, the firm estimates that combined demand and cost pressures could result in a mid-teens cent headwind to annual earnings.
Still, Jefferies maintains a “Buy” rating on Levi’s, citing improving business quality, a strong balance sheet, and valuation that remains below historical averages and peers.