Kontoor Brands (KTB) jumped over 11% on Monday after Goldman Sachs analyst Alexandra Walvis upgraded the stock to Buy from Sell and lifted the price target to $24 (22% upside potential) from $17.
Walvis is optimistic about Kontoor Brands saying that the anticipated negative catalysts, including negative earnings, estimate changes, and a dividend cut, are already priced into the stock.
The maker of Lee and Wrangler jeans is “best positioned relative to apparel wholesale peers to navigate the marketplace into the second half of 2020,” Walvis wrote in a note to investors. In comparison to its peers, Kontoor Brands has a “stronger-performing” wholesale partner network, with a new distribution on the horizon, along with an owned supply chain.
The company has a “significantly higher exposure to mass and online retail channels versus peers, and these distributors have delivered a faster return to normalized apparel sales relative to mall-based department stores,” Walvis added.
Meanwhile, the rest of the Street has a cautious outlook on KTB. The Hold analyst consensus shows 4 Buys, 3 Holds and 2 Sells. The average price target of $25 implies upside potential of about 27%. (See KTB stock analysis on TipRanks).
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