/Levi Strauss IPO, Pricing Forecasts Upgraded Amid Heavy Demand

Levi Strauss IPO, Pricing Forecasts Upgraded Amid Heavy Demand

The forthcoming Levi Strauss (LEVI) IPO has been upgraded by a research firm as the demand among institutional investors is higher than the amount of shares being offered.


According to underwriter guidance, the deal is multiple-times oversubscribed, and the pricing forecast has been raised $1-$2 above the prevailing $14-$16 range. The stock starts trading Thursday on the New York Stock Exchange under the ticker LEVI, after pricing Wednesday evening.

IPO research and advisory firm IPO Boutique has cited the positive sentiment around the offering as its rationale for upgrading its view of the stock.

“Due to the demand and very strong price guidance, we are upgrading the rating on this IPO from a ‘3’ to a ‘4’,” the firm said in a research note to clients.

According to the firm’s ratings a four represents a “strong buy,” where one to two points or more premium is likely.

Levi Strauss IPO Marks Comeback

This is not the first time Levi Strauss stock has been an option to investors. It was taken private in 1985 after a previous listing in 1971.

The iconic American jeans brand is selling 36.7 million shares. Current Levi Strauss stockholders plan to offer 27.2 million shares. The company, which traces its roots back to California’s Gold Rush, is selling about 9.5 million shares.

But with guidance for the Levi Strauss IPO pricing upgraded, the company now looks to raise more than the $587.2 million high end predicted earlier when the forecast was for $14-$16. Now, proceeds could reach $660.6 million.

JPMorgan Chase and Goldman Sachs are leading the IPO. Bank of America Merrill Lynch, Morgan Stanley, Evercore ISI, BNP Paribas, Citigroup, Guggenheim Securities, HSBC, Drexel Hamilton, Telsey Advisory Group and the Williams Capital Group are also underwriting the offering.

The Levi Strauss IPO is just one portion of a busy upcoming IPO slate for this year. Some of the most highly anticipated names include Uber, Lyft, Palantir, Airbnb and Slack.

Levi Strauss Stock Faces Changing Trends

In addition to jeans, the company makes casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories. Its brands include Dockers, Denizen and Signature.

Demand for denim has been questioned as new fashion trends take hold. Imports of stretchy knit pants exceeded those of denim for the first time in 2017.

In August, VF Corp. (VFC), which is one of the world’s biggest apparel makers, revealed it is spinning off its Lee and Wrangler jeans brands into a separate public company to concentrate on its more profitable Vans sneakers and The North Face outerwear businesses.

But overall jeans sales grew 2.2% to $16.7 billion last year after four consecutive years of declines, according to Euromonitor data. Denim also powered strong gains in apparel sales this past holiday season, while market tracker NPD Group has noted signs of slowing in athleisure as jeans and boots rebound.

That could spell bad news for the likes of Nike (NKE), Lululemon (LULU), Under Armour (UAA) and Gap (GPS), which have capitalized on the athleisure boom.


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