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Levi Strauss (LEVI) Earnings Preview

by | Jul 4, 2021

Levi Strauss (LEVI) reporting earnings on Thursday 7/8 after the close with the Street looking for $0.09 on $1.205B in sales. Next quarter is guided to $0.36 on $1.42B while the FY is $1.15/$5.55B. Shares have closed mixed over the last six quarters with an average closing move of 6.6% and a max move of 12%. The current implied move is 6.25%. Shares are trading just below new highs at $30 with a breakout targeting $36. Support is below around $22. The $10.8B company trades 19.7X earnings, 2.5X sales, and 5.2X cash with a 1% yield. LEVI has been a hot retail brand since late 2020 and coming off a year where they improved their cost structure and improved pricing across their styles. The CEO was interviewed in April noting that LEVI is leading the charge on growing trends, and they think there’s a bigger style shift happening towards looser fits which could spark a new denim cycle. LEVI is optimistic into Back-to-School season and their investments in DTC should continue to pay off.  Analysts have an average target for shares of $28 with a Street High $34 from JP Morgan. The firm was out on 4/19 raising estimates citing Chase Consumer Spending data which had materially accelerated in mid-March with overall spending exceeding pre-pandemic 2019 levels by 9% on average. Further, denim was the clear stand-out broadly coming out of JPMorgan’s annual retail round-up. UBS positive in April as well adding that the market does not fully appreciate the positive impact on its future earnings from the reopening, an emerging denim cycle, brand investments, sales mix shifts, and cost savings. Short interest is 4.4%. Hedge fund ownership rose 5.8% in Q1.

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