Weaker demand for denim products could prove a major headwind for shares of Levi Strauss in the near future, according to Citigroup.
Analyst Paul Lejuez downgraded the jeans maker to neutral from a buy rating, citing comments from other management teams indicating a slowdown in denim trends that began during the back-to-school season and persisted into the holidays. "While LEVI is a strong brand with good global prospects long-term, in the near to medium term we expect a challenging U.S.
Even after plummeting 38% in 2022 and underperforming Citi's broader coverage group over the past 12 months, Lejuez said Levi shares still don't look cheap. As a result, he trimmed Citi's price target to $17 from $19, suggesting that shares will only stay near Tuesday's closing price. He also views consensus 2023 earnings estimates as too high and lowered his estimate to $1.20 from $1.29 a share, compared to a Wall Street consensus of $1.39.
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