Gildan Activewear has a dominant position in the U.S. imprintables market as the industry's low cost producer, notes UBS, adding that the market does not fully appreciate Gildan's market share gain potential due to its Back-to-Basics strategy.

UBS also thinks the company is better positioned to navigate tariffs than many realize. "This is a reason we think GIL will be a relative outperformer in CY25. As GIL delivers better results than peers do over the NTM, we believe the stock will move toward our PT."

Highlights from Gildan's first-quarter report:

Gildan maintained its FY25 EPS guidance despite tariffs. "We believe this shows GIL has the market share gain potential, pricing power, and supply chain flexibility to offset a big part of the tariff expense."

GIL also noted much of its growth this year will come from "National Accounts" (e.g. large retailers and large brands). "We believe these accounts are actively looking for alternatives to sourcing from countries with potentially high tariffs and GIL is in a prime position to win business from these companies, especially since most of them already do business with GIL."

Raising FY25 EPS estimate by $0.15, to $3.45. FY26E EPS up $0.10 primarily due to a higher FY25E base, UBS said.

Maintain Buy rating, US$56 price target.