A Tale Of 2 Analysts: Divergent Opinions On Hanesbrands As It Enters Q4

One week ahead of Hanesbrands Inc. HBI's earnings report, and analysts are divided on the outlook of the company.

This Lady Prefers Hanes

Deutsche Bank initiated coverage on Hanesbrands with a Buy rating and a $29 price target.

“We expect HBI to hit its cash flow targets after two tough years through a return to sustainable positive organic sales growth, the low cost supply chain, Project Booster and working capital improvements, and synergies,” said Deutsche Bank analyst Tiffany Kanaga.

With Hanes trading well below its peers from a price to earnings perspective, Kanaga affirms that the company is poised for a multiple expansion if Hanesbrands can “clear the holiday hurdle” where the company is facing easy compares.

Brick And Mortar Heavy Hanes Causes Concern

Oppenheimer continues to believe in its “Brands Over Retailers” framework in today's evolving retail landscape, but with over 90 percent of sales deriving from brick-and-mortar retailers, the firm is not so confident in this brand.

Oppenheimer analyst Anna Andreeva hit Hanes with a downgrade from Outperform to Perform and lowered its price target from $32 to $26.

Hanesbrands third-quarter preliminary announcement called out strength internationally. The release also implied that North American sales remain pressured according to the analyst.

Rumors of Amazon.com, Inc. AMZN developing its own line of athletic apparel will likely affect value brands like Hanes’ Champion more than it may affect premium brands Nike Inc NKE and Under Armour Inc UAA.

“Athletic promotional landscape is only intensifying, as UAA focuses on less-technical/lower-ticket apparel and NKE continues rationalizing inventories, Champion brand could feel some pain. In addition, if in fact AMZN does develop own line of athletic apparel that likely impacts more value brands,” said Andreeva.

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