Levi Gains as Wells Fargo Rates It Overweight

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Investing.com – Levi Strauss stock (NYSE:LEVI) traded 1.5% higher Monday following an overweight rating by Wells Fargo (NYSE:WFC) which put a tag of $31 on the share, a nearly 13% upside from its current level.

Analyst Ike Boruchow initiated the coverage of Levi as “one of the higher quality global brands in our space today.”

According to the analyst, a new multi-year topline growth in denim has begun and is in its early innings.

“Specifically, demand for ‘loose t’ product is gathering momentum, which is a positive development for the denim category overall, and Levi in particular, given its number 1 share position globally,” the analyst wrote in a note.

The analyst believes silhouette or ‘t’ trends tend to last longer and is thus a clear category tailwind for Levi today.

“With multiple margin tailwinds all gaining momentum at the same time (including direct-to-consumer 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 entry into one of the fastest-growing categories within apparel: athleisure, the analyst said. “More notably, it adds greater visibility into ramping up the company’s higher-margin women’s business”.