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Levi Strauss Rises on Earnings, Raised Guidance

Levi Strauss rose after the jeans icon reported sales and earnings that exceeded Wall Street expectations and raised guidance, leading to price target upgrades.

Shares of Levi Strauss  (LEVI) - Get Levi Strauss & Co Class A Report advanced Friday after the maker of jeans and other clothing reported better-than-expected earnings and raised its guidance, sparking a slew of price-target upgrades.

The company also increased its quarterly dividend to 6 cents a share from 4 cents, payable May 25 to holders of record May 7.

Shares of the San Francisco company at last check rose 4.5% to $26.14.

Levi Strauss reported better-than-expected earnings and revenue for the first quarter ended Feb. 28 and raised its revenue forecast for the first half of fiscal 2021 by nearly 25%.

It also lifted its first-half adjusted-earnings estimate to between 41 cents and 42 cents a share, saying the forecast assumes "no significant worsening of the COVID-19 pandemic or dramatic incremental closure of global economies."

For the first quarter Levi Strauss earned 35 cents a share against 37 cents in the year-earlier quarter. Revenue declined 13% to $1.31 billion from $1.51 billion.

A survey of analysts by FactSet produced consensus estimates of GAAP earnings of 25 cents a share, or an adjusted 24 cents, on revenue of $1.25 billion.

Analysts at JPMorgan JPM raised their December 2021 price target on Levi Strauss to $29 a share from $24.

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"We view the combination of a strong tenured management team led by [Chief Executive] Charles V. Bergh and brand heritage as a competitive advantage," wrote Matthew R. Boss, Grace Smalley and Amanda K. Douglas in a recent note.

JPMorgan analysts supported LEVI's “faster-than-expected recovery” in the first quarter as well as its “confident” outlook on the consumer’s recovery post-vaccine.

JPMorgan has an overweight rating on the stock.

Analysts at UBS Securities raised their price target on Levi Strauss to $34 from $29.

Evercore analyst Omar Saad said Thursday’s call with the CEO marked a substantial shift in tone from Chief Financial Officer Harmit Singh’s statements just six months ago.

Bergh said on the Thursday call with analysts that "confidence in the business is even higher than it was just a month ago for several reasons. 

"We’re seeing consumer demand increase given the continued recovery in the U.S. and Asia and demand signals for our wholesale business in Europe are even higher than they were in 2019. 

"We’re encouraged by the positive news of the progress of the vaccine rollout in many parts of the world. Consumer excitement and optimism is returning in ways it hasn’t since well before the pandemic."