Hanesbrands Analysts Upgrade Stock Ahead Of Q2 Report, Eye PPE Sales Opportunity

Hanesbrands Inc. HBI is scheduled to report second-quarter results Thursday, July 30, and two analysts are upgrading the stock ahead of the print. 

The Hanesbrands Analysts 

BofA Securities analyst Heather Balsky upgraded Hanesbrands from Underperform to Neutral and lifted the price target from $8.50 to $14. 

Raymond James analyst Matthew McClintock upgraded Hanesbrands from Market Perform to Strong Buy and set a $20 price target. 

BofA Sees Mask-Making Opportunity For Hanesbrands

Referring to Champion, a segment that contributed 34% of the company’s sales in 2019, Balsky said the COVID-19 crisis had boosted demand for comfortable apparel, which is likely to drive near-term sales and extend the brand’s life cycle.

The U.S. government’s mask program should partially mitigate the impact of retail store shutdowns and depressed innerwear restocking, “while absorbing some manufacturing inefficiency” in the second quarter, the analyst said. 

Balsky estimates $10 million in mask sales in the second half of the year, with opportunity for upside.

The replacement of retiring CEO Gerald Evans with Stephen Bratspies in early August will provide a fresh start and could boost investor sentiment, according to BofA. 

RayJay Raises Hanesbrands Earnings Estimates

Physical store checks indicate that the near-term performance of Champion and Hanes could be better than expected, McClintock said in the Wednesday upgrade note.

Hanesbrands is exceptionally well-positioned in today's challenging environment given its “inherent competitive advantages of scale, strong brands, and in-house supply chain,” the analyst aid. 

The company shipped 450 million masks and 20 million gowns to the U.S. government in the second quarter, he said.

RayJay raised its earnings estimates for 2020 and 2021 to $1.30 and $1.70 per share, respectively.

HBI Price Action

Hanesbrands shares were up 11% at $13.92 at last check Wednesday. 

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