Levi Strauss' (LEVI) pending divestiture of its Dockers brand will allow the company to improve its organic revenue growth profile, UBS Securities said in a note Tuesday.
The sale will also enable Levi Strauss to generate higher margins by reducing its cost structure, further cut its US wholesale exposure and simplify its business to focus on the core Levi's brand and Beyond Yoga business, the firm said.
The deal, expected to close around July 31 for Dockers' US and Canada businesses and around Jan. 31 next year for remaining operations, will also enable Levi Strauss to go ahead with incremental share repurchases, UBS said.
UBS said its earnings-per-share forecast for 2025 is largely unchanged after accounting for the incremental $100 million in share buybacks.
UBS maintained the company's buy rating and $20 price target.
Price: 17.58, Change: -0.27, Percent Change: -1.49
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