Gildan Activewear stock price target cut to $64 by BMO on demand concerns

BMO Capital has reduced its price target on Gildan Activewear Inc. (NYSE:GIL) to $64 from $82, while retaining an Outperform rating on the stock. The company's shares are currently trading at $40.54, marking a 34% decline year-to-date and nearing the 52-week low of $39.73. This reduction in the price target comes as BMO Capital forecasts a weaker macroeconomic environment ahead of Gildan's third-quarter fiscal 2026 results, scheduled for November 5.

The firm attributes the decline in the stock price to inflationary pressures and rising interest rates, which are expected to affect consumer spending among lower- and middle-income retail customers, as well as reduce wholesale demand. BMO Capital anticipates a reset in expectations regarding consumer demand, channel replenishment, and the feasibility of Gildan's fiscal 2026 guidance. The stock's performance since the second quarter suggests these factors have played a role in the recent downward trend.

Despite the weaker market backdrop, BMO Capital maintains a constructive outlook on Gildan's ability to increase market share and capitalize on HanesBrands integration synergies. The firm has lowered its financial estimates to account for the anticipated demand headwinds. Gildan Activewear reported its second-quarter 2026 financial results, which showed stronger-than-expected adjusted profits, but fell short of sales forecasts.

The company reported adjusted diluted earnings of $1.28 per share, exceeding analyst expectations of $1.12. Revenue for the quarter amounted to $1.58 billion, below the projected $1.61 billion. The improvement in earnings was driven by the HanesBrands acquisition, which has contributed to higher margins and early synergy gains. Additionally, Gildan Activewear has reduced its sales guidance due to a softer start to July, impacting overall sales growth.

Recently, Scotiabank raised its price target for Gildan Activewear shares to $67 from $65, maintaining a Sector Outperform rating. These developments highlight the evolving strategic and financial landscape of Gildan Activewear.