Hanesbrand's Veteran CEO Replacement 'Should Minimize Transition Risk'

UBS analysts, Michael Binetti, and Kaitlyn Walsh, believes that Hanesbrand Inc.

shares should have minimum transition risk due to the CEO replacement. The brokerage has a rating of Buy with 12-month price target of $37.00 on the shares of the company. The two analysts pointed out that Hanesbrand announced that the current CEO and Executive Chairman, Rich Noll, would be transitioned out of his role as CEO. Its COO, Gerald Evans, would succeed Noll as its CEO of October 2016 while Evans has been with HBI for three decades. The brokerage believes that he has been very closely involved with HBI's growth plans, as well as, portfolio management tactics. The analysts viewed, "At this time, we don't think the transition significantly changes the outlook for the company. Maintaining Positive Thesis on HBI Amidst Management Change. We don't expect Monday's management announcement to impact HBI's ability to deliver LT targets." UBS thinks that it believes HBI could continue to deliver +double-digit EPS growth through a combination of ongoing operating profit dollar growth, share repurchases, and accretive M&A. The two analysts said that "We see ongoing opportunities to drive pricing through innovation (with potential for the most significant product launch in years in 2H16), and we would expect HBI to continue its investments in DTC to support its online market share." While second quarter US retail trends remain tough (increasing the risk of HBI missing organic revenue targets), the brokerage think the cadence of M&A synergies should allow HBI to raise EPS estimates in the next few quarters. That said, HBI announced $0.04 of M&A upside for the second quarter. The stock traded 1.76 percent down on Tuesday.