HanesBrands Leads among the Top-Rated Apparel Stocks

Sonya Bells - Author

Aug. 7 2017, Updated 10:39 a.m. ET

HBI’s stock market performance

HanesBrands (HBI) stock rose 2.6% on August 2 as the company posted results that were in line with Wall Street’s expectations and the company’s guidance.

HBI is currently trading at $23.84, sitting at YTD (year-to-date) gains of 10.5%. Branded apparel peers PVH Corp. (PVH) and VF Corporation (VFC) have recorded improved gains of 34% and 18%, respectively.

However, Under Armour (UAA) and Ralph Lauren (RL) are among the companies whose poor results have pushed their stock to the lower end of the spectrum. UAA and RL are down 16% and 37%, respectively.

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Wall Street rates HBI higher than peers

HanesBrands is covered by 15 Wall Street analysts, who have rated the stock a 1.9 on a scale of 1.0 (strong buy) to 5.0 (strong sell). The company is among the best-rated branded apparel stocks. In comparison, PVH Corp. (PVH), Ralph Lauren (RL), and VF Corporation (VFC) are rated 2.0, 3.1, and 2.7, respectively.

There were no rating changes for HBI stock after its 2Q17 results. However, Credit Suisse reduced the company’s price target to $28.00 from $30.00 while maintaining its “outperform” rating.

Wall Street recommendations

Of the analysts covering HBI stock, 73%—including C.L. King, D.A. Davidson, and Northland Securities—suggest buying HBI stock. The remaining 27% recommend holding it, while none suggest selling it. Cowen & Co. and Morgan Stanley are among the brokers who suggest holding the stock.

A look at HBI’s target price

HBI stock is currently trading 26% below its 52-week high price. Wall Street has assigned an average price target of $27.14 on the company, which indicates an upside of 14% over the next 12 months. This is among the best upside potentials in the branded apparel peer group.

The stock prices of PVH and Gap are expected to change 3% and 8%, respectively. VFC and RL stock are predicted to fall 5% and 2%, respectively, over the next 12 months.

Investors seeking exposure to HBI can consider the iShares Morningstar Mid-Cap ETF (JKG), which invests ~0.5% of its portfolio in HBI.


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