© Reuters. HanesBrands (HBI) faces challenges, Champion not a leading athletic apparel brand – UBS
HanesBrands (HBI) faces challenges, according to UBS analysts, who said in a note Thursday that the firm is not bullish on a possible divestiture of Champion.
UBS currently has a Neutral rating and a $4.50 price target on the stock. Analysts told investors that HBI has said it is pursuing an evaluation of strategic options for its Champion business and that potential asset divestures could boost HBI’s stock price and reduce its debt burden.
However, they note that the UBS Evidence Lab’s 2023 Global Athletic Wear Survey suggests Champion is not a leading athletic apparel brand.
“This reinforces our view HBI will probably not receive a price for Champion, which would be a major positive catalyst for the stock,” analysts wrote.
According to the bank’s latest survey, Champion “doesn’t have great brand attributes” and “doesn’t stand out in areas such as prestige, innovation, or quality.”
In addition, analysts noted that the survey showed that Champion might be becoming less relevant to consumers compared to other brands.
“We forecast a +LSD% long-term EPS CAGR and see more downside than upside risk to our forecast. Plus, our FY24 EPS estimate is 17% below consensus,” analysts added.
