Levi Strauss & Co.’s (LEVI) stock received a rating upgrade from Hold to buy from analyst Matthew Boss at J.P. Morgan after the company’s strong Q1 earnings. With the stock’s recent decline, J.P. Morgan sees a great opportunity for investors at an attractive valuation. However, Boss reduced his price target on LEVI stock from $19 to $17, implying a potential upside of 26%. Notably, LEVI stock jumped more than 14% in pre-market trading Tuesday after the company posted stronger-than-expected results for the first quarter of 2025.
JPMorgan Sees Pullback as a Buying Opportunity
J.P. Morgan pointed out that Levi’s stock has dropped over the last few months, giving investors a chance to buy the stock at a cheap price. Notably, LEVI stock is down by almost 30% in the last six months.
At the same time, Boss stated that this is a good time to invest as the stock trades at about 5 times its expected 2026 EBITDA (earnings before interest, tax, depreciation, and amortization). He further highlighted Levi’s strong potential for long-term returns, driven by its 3.7% dividend yield.
JPMorgan Praises Levi’s Margin Game
J. P. Morgan’s Boss mentioned that Levi’s gross margin game is solid, thanks to a shift from wholesale to more direct-to-consumer sales, lower product costs, and more full-price sales. In Q1 2025, Levi’s gross margin rose by 330 basis points to 62.1%, up from 58.8% in Q1 2024. He also noted that Levi’s move to cut out lower-margin businesses like Denizen, European footwear, and Dockers has helped boost overall profit margins and improve the company’s long-term earnings strength.
Boss also addressed the elephant in the room, tariffs. He highlighted Levi’s diverse supply chain, noting that just 1% of its U.S. sourcing comes from China. This lower reliance helps reduce risks from tariffs, which he said had little impact on the company in 2018 and 2019.
Is Levi a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on LEVI stock based on six Buys, six Holds, and zero Sells assigned in the past three months. The LEVI share forecast of $20.58 per share implies a 52.4% upside potential.
