Barclays has adjusted its price target for Kontoor Brands (KTB, Financial), bringing it down to $69 from the previous $93, while maintaining an Overweight rating on the stock. The financial institution expresses a reserved outlook for the short-term performance of specialty retail stocks, attributing this to ongoing market volatility and uncertain policy developments that are impacting both consumer and business confidence.
The apparel sector, in particular, is facing significant challenges due to fluctuations in tariff policies, as the majority of clothing sold in the U.S. is manufactured overseas. The lack of stable long-term policy options exacerbates the difficulties in sourcing alternatives. In response to these industry-wide pressures, Barclays has revised down estimates across the sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for Kontoor Brands Inc (KTB, Financial) is $77.20 with a high estimate of $93.00 and a low estimate of $48.00. The average target implies an upside of 25.59% from the current price of $61.47. More detailed estimate data can be found on the Kontoor Brands Inc (KTB) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Kontoor Brands Inc's (KTB, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Kontoor Brands Inc (KTB, Financial) in one year is $49.64, suggesting a downside of 19.25% from the current price of $61.47. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Kontoor Brands Inc (KTB) Summary page.
KTB Key Business Developments
Release Date: February 25, 2025
- Global Revenue: Increased 5% in Q4 2024.
- Wrangler Global Revenue: Increased 9% in Q4 2024.
- Lee Global Revenue: Decreased 5% in Q4 2024.
- Adjusted Gross Margin: Expanded 160 basis points to 44.7% in Q4 2024.
- Cash from Operations: Generated approximately $370 million in 2024.
- Cash Returned to Shareholders: Nearly $200 million through dividends and share repurchases in 2024.
- Inventory: Decreased 22% to $390 million.
- Net Debt: $406 million with a net leverage ratio of 1.0 times.
- Adjusted Earnings Per Share (EPS): $1.38 in Q4 2024, a 2% increase from the prior year.
- Dividend: Regular quarterly cash dividend of $0.52 per share.
- Return on Invested Capital: 32%, an increase of 550 basis points compared to the prior year.
- Project Genius Savings Target: Raised to $100 million with benefits starting in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kontoor Brands Inc (KTB, Financial) reported better-than-expected revenue and profitability for the fourth quarter of 2024.
- The company's digital business grew 11% for the year, with a 16% increase in the fourth quarter.
- Project Genius is expected to deliver $100 million in savings, with benefits starting to flow through the P&L in 2025.
- Wrangler brand achieved 11 consecutive quarters of market share growth, with a 9% increase in global revenue in the fourth quarter.
- Kontoor Brands Inc (KTB) returned approximately $200 million to shareholders through dividends and share repurchases in 2024.
Negative Points
- Lee brand's global revenue decreased by 5% in the fourth quarter, with challenges in the mid-tier channel impacting wholesale revenue.
- The company anticipates a potential $50 million impact on operating profit in 2025 if proposed tariffs on imports from Mexico are implemented.
- Lee's performance was below expectations, with a 6% decline in US revenue driven by a decrease in wholesale.
- The consumer environment remains uncertain, with recent POS trends showing a decline in February.
- Kontoor Brands Inc (KTB) paused share repurchase activity in anticipation of the acquisition of Hallie Hansen.
