What Happened?
Shares of denim clothing company Levi's (NYSE: LEVI) jumped 9.7% in the afternoon session after the company reported better-than-expected second-quarter earnings and raised its full-year guidance.
The denim giant announced fiscal second-quarter adjusted earnings of $0.22 per share on revenue of $1.45 billion, handily beating analyst expectations. This performance was driven by strong sales in its direct-to-consumer (DTC) channel, which now accounts for half of total revenue, and broad-based growth across its regions.
Buoyed by the strong results, Levi's raised its full-year forecast. The company now expects reported net revenue growth of 1% to 2%, an improvement from its previous outlook of a 1% to 2% decline. It also boosted its adjusted earnings per share (EPS) guidance to a range of $1.25 to $1.30. Management expressed confidence in this outlook despite the potential impact of higher tariffs.
Following the positive report, several Wall Street analysts raised their price targets on the stock, citing strong execution and momentum. JPMorgan, for instance, lifted its target to $23 from $18.
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What Is The Market Telling Us
Levi’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Levi's is up 25.2% since the beginning of the year, and at $21.81 per share, has set a new 52-week high. Investors who bought $1,000 worth of Levi’s shares 5 years ago would now be looking at an investment worth $1,760.
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