Jefferies initiated coverage of Kontoor Brands Inc. with a Hold rating and a $65.00 price target, according to the research note released on Wednesday. The target sits marginally above the stock’s most recently reported share price of $62.37.
The brokerage underscored that since Kontoor separated from VFC in 2019, bringing the Lee brand into the stand-alone company, management has directed investment toward bolstering both growth and profitability metrics. That focus appears to have yielded measurable returns: company data indicate a return on equity of 49%.
Jefferies called out brand-level performance as a differentiator within the portfolio. Wrangler has benefited from Western-influenced fashion trends, while the company is seeing growth opportunities in female and outdoor apparel categories. These dynamics were cited as contributors to Kontoor’s recent top-line and margin trends.
Despite those positives, the research note identified several headwinds that temper the firm’s view. Jefferies noted Kontoor’s relatively high wholesale mix and reported that the Lee brand was experiencing a mid-single-digit year-over-year revenue decline. The firm also highlighted the possibility of reduced tariff mitigation beginning in 2026 and signaled uncertainty around the accretion profile of the Helly Hansen acquisition, pointing to potential reinvestment needs that could affect near-term financial accretion.
On liquidity, the company appears well-positioned: balance sheet data show a current ratio of 1.91, indicating that liquid assets exceed short-term obligations. Jefferies nevertheless cautioned that the stock’s valuation does not look compelling at face value. The firm stated it does not view a price-to-earnings multiple of roughly 10.5x as inexpensive and suggested the market will likely demand clearer execution and better visibility before supporting multiple expansion.
Other valuation and income metrics published alongside analyst commentary show a different point estimate for P/E, with the company trading at a P/E of 16.01 under an alternate dataset. Kontoor also offers a 3.4% dividend yield and has increased its dividend for five consecutive years. A separate fair-value calculation in that dataset suggested the shares may be slightly undervalued relative to that model.
The Jefferies initiation arrives amid fresh positioning by other brokerages after Kontoor’s recent quarterly report. UBS raised its price target to $118 while retaining a Buy rating, citing a "beat and raise" in the latest results even as the stock saw some pullback following the earnings release. Stifel moved its target to $75 and kept a Hold rating, pointing to initial revenue progress from the Helly Hansen acquisition and continued strength in Wrangler, while still flagging lingering challenges with Lee.
Collectively, the analyst actions reflect differing assessments of Kontoor’s near-term execution and longer-term growth prospects. Jefferies’ Hold and $65 target balance the company’s strong return metrics and brand momentum against mix, brand-specific softness, and acquisition-related uncertainties.
Key points
- Jefferies starts coverage with a Hold rating and $65 price target; current share price noted at $62.37.
- Kontoor has invested in growth and profitability since its 2019 spin-off; reported return on equity of 49% supports that trend.
- Other brokers show divergent views: UBS raised its target to $118 and maintained Buy; Stifel increased its target to $75 and kept Hold.
Risks and uncertainties
- High wholesale sales mix could pressure margins and volume - impacts apparel and retail sectors.
- Lee brand showing mid-single-digit decline year-over-year, creating execution risk for the company’s portfolio recovery.
- Potential reduction in tariff mitigation in 2026 and unclear accretion profile for the Helly Hansen acquisition due to reinvestment needs - these raise uncertainty around near-term profitability and integration outcomes.
For investors and market participants, the juxtaposition of solid returns and visible brand momentum against execution and integration questions will likely shape near-term trading and valuation discussion for the apparel and retail segments.