Analyst Stephen Macleod of BMO Capital maintained a Buy rating on Gildan Activewear, boosting the price target to $70.00.
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Stephen Macleod has given his Buy rating due to a combination of factors that highlight Gildan Activewear’s strategic acquisition of HanesBrands. This acquisition positions Gildan as a global leader in the basics apparel sector by merging its stronghold in activewear with HanesBrands’ dominance in U.S. innerwear. The deal is expected to enhance Gildan’s competitive edge, optimize manufacturing processes, and drive significant earnings and free cash flow growth, with earnings accretion and pro forma leverage surpassing initial estimates.
Additionally, the acquisition is set to diversify Gildan’s product and channel mix, offering a balanced portfolio of innerwear and activewear, and a more varied retail and printwear channel distribution. The synergy between Gildan’s cost-effective manufacturing and Hanes’ retail brand strength is anticipated to spur growth in Hanes’ activewear segment. With identified synergies expected to be realized in the coming years and a promising growth outlook, the acquisition is poised to deliver substantial value, justifying the Buy rating.
In another report released today, Desjardins also reiterated a Buy rating on the stock with a C$80.00 price target.