Bank Of America Reiterates Buy On Levi Strauss After Q3 Earnings Beat

Levi Strauss & Co. LEVI shares are plummeting despite reporting a third quarter earnings beat on Tuesday.

The San Francisco-based company reported third quarter earnings of 31 cents per share, beating estimates by 3 cents. Sales came in at $1.447 billion, beating estimates by $7 million.

The Analyst

Bank of America analyst Heather Balsky reiterates a Buy rating and raised her price target from $20 to $22.

The Thesis

Bank of America says Levi Strauss is poised to drive outsized growth and and post sales and earnings beats moving forward.

Balsky says sales growth of 4% was well above her +2% view on international strength. The analyst noted Americas sales missed her estimates by 5%, coming in at -3% due to a tough wholesale environment and the timing orders but direct to consumer was strong at +9%.

“The outlook reflects international strength, partly offset by less off-price selling (mostly Dockers) and no 2H sales to its South American distributor ahead of LEVI buying the business,” she said.

CNBC's Pete Najarian says Levi’s posted some impressive growth in various geographies.

“If you focus on where they are growing I find it pretty impressive. They are up 14% in Europe and 9% in China and we all know they are expanding more in the Women’s category, its something they need to expand, and they are doing it.”

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