Levi ‘in the early innings of a favorable denim cycle’ – TD Cowen

TD Cowen analysts started Levi (NYSE:) at Outperform with a price target of $16 per share in a note Wednesday.

The analysts told investors to “button up for global growth” as the company, a denim icon, “transforms.”

“With #1 brand awareness and market share, Levi’s is well positioned to grow direct-to-consumer engagement, international presence, and a lifestyle product assortment beyond denim,” the analysts wrote.

“We believe Levi’s is in the early innings of a favorable denim cycle of new fits and styles driven by younger, fashion-forward consumers. Its “icon” status as a heritage brand is evident, and TD Cowen’s proprietary Denim Survey results suggest superior brand awareness within an attractive ~$93B global denim space,” they added.

TD Cowen believes a long-term EPS growth algorithm of +12% is achievable, supported by +6% annual revenue growth and consistent gross margin expansion. In addition, the analysts said the company’s valuation “appears reasonable at 10x FY24E P/E.”