BNP Paribas Exane raises Levi Strauss price target to $35

BNP Paribas Exane has increased its price target on Levi Strauss & Co. stock to $35 from an unspecified previous level, while retaining an "Outperform" rating for the shares. The firm highlighted the company's strong third-quarter revenue performance, with a 4% increase reported and a 5% increase in constant currency. Levi Strauss boasts an impressive gross profit margin of 61.6% over the past year, demonstrating robust pricing power despite competitive pressures.

However, the quarter faced negative impacts from direct-to-consumer sales trends in the U.S. and Europe, which slightly outperformed expectations in recent months. The analyst noted a positive shift in these trends following conversations with management. BNP Paribas Exane has incorporated these factors into its valuation, extending it to fiscal year 2027 and adjusting near-term estimates to account for distribution challenges and the ongoing impact of tariff benefits.

The firm currently maintains a 20x multiple on the stock, viewing the hurdles as temporary and reaffirming management's growth projections. Levi Strauss reported a 4.3% year-over-year increase in net sales, reaching $1.6 billion for the third quarter, and earnings per share of $0.48, surpassing some analyst estimates, aided by a $0.16 tariff refund benefit.

Despite this, the company faced challenges with its direct-to-consumer sales, which were weaker than anticipated in both the U.S. and Europe. This marks the first net revenue miss in nearly two years, attributed to margin concerns from tariff refunds versus reinvestment efforts. Other analysts have also adjusted their price targets for Levi Strauss, with Stifel lowering it to $26 with a Buy rating and BofA Securities reducing its target to $25, both maintaining Buy ratings.

Raymond James lowered its price target to $22, describing the company’s results as "messy" but still favorable in terms of risk/reward, while BTIG reaffirmed its Buy rating with a $27 target, emphasizing Levi Strauss’s diversified growth potential.