On Thursday, TD Cowen remains optimistic about Levi Strauss & Co. (NYSE:LEVI) shares, with a revised price target of $23, up from the previous $23. The firm maintains its Buy rating, citing several factors that contribute to a positive outlook for the company.
The analyst at TD Cowen highlighted increased confidence in the stabilization of wholesale demand and continued progress in the international and non-denim segments as key drivers for the raised price target. The new target is set based on a forecasted earnings per share (EPS) of $1.46 for the fiscal year 2025 and a price-to-earnings (P/E) ratio of 16 times.
Levi Strauss's current P/E ratio stands at 13 times the forecasted earnings, which the analyst notes is appealing when compared to the five-year average of 14 times. The stock's valuation is also in line with that of American Eagle Outfitters (NYSE:AEO), yet Levi Strauss is seen to have a stronger growth trajectory and a larger global market to tap into.
The long-term revenue growth algorithm for Levi Strauss is estimated at 6% to 8%, which surpasses that of American Eagle Outfitters, which is projected to grow at a rate of 3% to 5%. Additionally, Levi Strauss boasts a significant international presence, with 60% of its business mix attributed to international markets.
The analyst's comments underscore the potential for Levi Strauss to capitalize on its global reach and the diverse product categories it offers beyond its traditional denim lineup. With the stock trading at a multiple that reflects its robust growth prospects, the analyst's raised price target suggests confidence in the company's future performance.
InvestingPro Insights
Levi Strauss & Co. (NYSE:LEVI) has shown resilience and growth potential that is reflected in its recent financial metrics. The company's market capitalization stands at a solid $7.43 billion, indicating a significant presence in the apparel industry. The adjusted P/E ratio for the last twelve months as of Q4 2023 is 18.49, which is lower than the current P/E ratio highlighted in the article, suggesting a more attractive valuation in historical terms. With a moderate P/E growth (PEG) ratio of -0.53, investors may interpret this as a signal of the stock's potential undervaluation relative to its earnings growth.
InvestingPro Tips reveal that Levi Strauss has been profitable over the last twelve months and has seen a large price uptick over the last six months, with a 41.16% price total return. This aligns with the positive sentiment expressed by TD Cowen, as the company has also raised its dividend for 5 consecutive years, showcasing its commitment to returning value to shareholders. For those interested in further insights, there are additional InvestingPro Tips available for Levi Strauss, which can be accessed with the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
With its liquid assets exceeding short-term obligations and operating with a moderate level of debt, Levi Strauss appears to be in a strong financial position. This information complements the analyst's view of the company's favorable growth prospects and international market presence. For investors seeking a comprehensive analysis, there are 6 more InvestingPro Tips available, offering a deeper dive into the company's performance and potential.
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