Stifel on Levi Strauss & Co. (LEVI): 'Favorable Price Achieved in Agreement to Sell Dockers for $311'

Stifel analyst Jim Duffy reiterated a Buy rating and $20.00 price target on Levi Strauss & Co. (NYSE: LEVI).

The analyst comments "The announced agreement to sell the Dockers Brand for $311mn represents nearly 1x EV/ Sales, a favorable price considering breakeven earnings. LEVI progresses its strategy to focus on higher growth, higher margin opportunities and the Dockers sale follows the exploration of strategic alternatives (4Q24) and treatment as discontinued ops (1Q25). On a go-forward basis, the business has capacity for MSD% cc organic revenue growth, supporting capacity for operating margin expansion from 10.7% in FY24. Intentions to dedicate ~$100mn proceeds through share repurchases add $0.01 to FY25 earnings power (+$0.02 to FY26), and represents 1.4% of market cap. We view the strategy to develop higher value opportunities favorably and contemplate valuation on a tariff-impacted basis (tariffs -$0.18 to FY26E assuming 10% blanket, 30% China rates). We reaffirm our $20 TP which represents 14.9x P/E on pro forma FY26E earnings power of $1.34, or 13.3x P/E on published estimates of $1.50."

For an analyst ratings summary and ratings history on Levi Strauss & Co. click here. For more ratings news on Levi Strauss & Co. click here.

Shares of Levi Strauss & Co. closed at $17.58 yesterday.

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