Morgan Stanley downgrades Levi Strauss as macro headwinds pressure earnings
According to Morgan Stanley, the outlook for Levi Strauss going forward is unclear. “Macro uncertainty + advanced apparel inventory may limit positive EPS revision,” analyst Kimberly Greenberger wrote in a note to clients Thursday. “So while our creative thesis and conjecture are unchanged, we downgrade to EW.” Data from FactSet shows that the downgrade made Morgan Stanley the only Wall Street firm that does not rate the levy as a buy. Markets are grappling with a difficult economic situation as recession fears mount and the Federal Reserve continues its rate-hike cycle. At the same time, retailers are grappling with persistently high import levels, which could affect apparel prices, Greenberger wrote. Combined, these uncertainties put the company’s full-year guidance in retail at risk, as well as limit visibility into the not-too-distant future, she said. Greenberger wrote, “While we are comfortable with Levi’s current inventory levels and leave our fiscal year projections unchanged for now (more on the bottom), we are concerned that the abundance of inventory across the market will continue to grow from here onwards.” Income may limit LEVI’s possibilities for modification.” The stock may remain “limited” for some time. Greenberger maintained the bank’s $19 price target on the stock, meaning it’s down 2% from Wednesday’s close. Shares of the clothing company have fallen more than 22% this year and are down 33% from their 52-week highs. — CNBC’s Michael Bloom contributed reporting
