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Hanesbrands Gets a Boost after Credit Suisse and Wells Fargo Upgrade

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Today, Credit Suisse and Wells Fargo upgraded Hanesbrands (NYSE:HBI) from a “neutral” to an “outperform” rating. Meanwhile, Credit Suisse raised its target price from $13 to $15. As reported by Seeking Alpha, Credit Suisse thinks that Hanesbrands has performed better than its peers during the pandemic. In the research, the investment firm noted that 50% of the company’s stores were open even during the lockdown. Also, Credit Suisse said that the company earned approximately $300 million from its mask business, which helped offset factory deleverage.

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Credit Suisse added that Hanesbrands is better positioned for the next six months with its stable distribution channels. Also, there has been an increased demand for the company’s products. The investment firm thinks that analysts’ consensus estimates for 2021 are on the lower side given Hanesbrands’s stable business category.

Meanwhile, as reported by CNBC, Wells Fargo upgraded the stock. The basic apparel category has outperformed other retail categories since the stores reopened.

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Other analysts’ recommendations for Hanesbrands

Earlier this month, Cowen raised its target price from $12 to $14. As of July 14, analysts’ consensus target price was $10.85, which represents a fall of 5.4% from Monday’s closing price. Meanwhile, Wall Street favors a “hold” rating for the stock. Among the 14 analysts, 42.9% recommend a “hold,” 35.7% recommend a “buy,” and 21.4% recommend a “sell.”

Stock performance

The upgrades from Credit Suisse and Wells Fargo increased investors’ confidence in Hanesbrands. Today, the stock was trading 7.2% higher as of 10:31 AM ET. Meanwhile, the company has lost 22.8% of its stock value this year as of Monday’s closing price. Despite the decline, Hanesbrands has outperformed VF (NYSE:VFC), PVH (NYSE:PVH), and Ralph Lauren (NYSE:RL).  VFC, PVH, and Ralph Lauren have fallen by 39.7%, 56.8%, and 40.6% YTD, respectively.

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Hanesbrands’ stock price fell due to temporary store closures and weakness in the apparel sector. In the first-quarter earnings, the company beat analysts’ revenue expectations, while its EPS missed the expectations.

Analysts’ Q2 expectations

Hanesbrands will likely report its second-quarter earnings before the market opens on July 30. For the quarter, analysts expect the company to report revenues of $1.15 billion. The amount represents a fall of 34.7% from $1.76 billion in the second quarter of 2019. For the quarter, analysts expect the company to report a loss of $0.1 per share, which represents a fall of 121.1% from $0.45 in the second quarter of 2019.

Last week, Levi Strauss reported its second-quarter performance. To learn more, read Levi Strauss Sees Weak Second Half, Will Cut 15% of Workforce.

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