Levi Strauss Is Attractive From 'Tops' To 'Bottoms,' Wells Fargo Says

Levi Strauss & Co. LEVI has indicated it is in the early stages of a new denim cycle, according to Wells Fargo.

The Levi Strauss Analyst: Ike Boruchow initiated coverage of Levi Strauss with an Overweight rating and a price target of $31.

The Levi Strauss Thesis: The company is among the “higher quality global brands in our space” and the new denim cycle appears to be a “clear category tailwind,” Boruchow said in the initiation note.

“While management's current margin target sits at 12%+, we believe an elevated target will be placed on the table at some point in the near-term,” the analyst wrote.

“With multiple margin tailwinds all gaining momentum at the same time (including DTC shift, increased focus on women's, China model ramp-up, and e-comm profitability inflection), we believe a 14-16% margin is very much on the table for the business,” he added.

The recent acquisition of Beyond Yoga provides Levi Strauss “entry into one of the fastest-growing categories within apparel: athleisure,” Boruchow further noted.

LEVI Price Action: Shares of Levi Strauss had risen by 1.45% to $27.26 at the time of publication Monday.

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