Gildan Activewear’s Strategic Growth and Financial Promise: A Buy Rating Justification

Gildan Activewear (GIL – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Stephen Macleod from BMO Capital reiterated a Buy rating on the stock and has a $43.00 price target.

Stephen Macleod’s rating is based on a combination of Gildan Activewear’s solid strategic initiatives and promising financial targets. During the investor update call, the new CEO Vince Tyra presented five strategic priorities aimed at driving the company’s growth which aligns with the existing Gildan Sustainable Growth strategy. These include expanding manufacturing capacity, optimizing brand positioning, expanding retail partnerships, targeting growth in select international markets, and fostering talent development. Macleod views these priorities as likely to bolster market share and open avenues in new markets, which supports the company’s medium-term financial targets that align with BMO’s projections.

Furthermore, Macleod underscores the company’s strong underlying fundamentals and attractive risk-reward profile, underscoring its robust, vertically integrated manufacturing capabilities and capacity for market share gains. Gildan’s reiterated guidance for 2024 and its medium-term targets through 2028, including a net sales CAGR in the mid-single digits and an adjusted EBIT margin of 18-21%, reflect confidence in the company’s growth trajectory. The stock’s valuation, trading below its long-term average, combined with the potential for organic growth investments and accretive M&A, further bolsters the rationale for a Buy rating.

In another report released today, Desjardins also maintained a Buy rating on the stock with a C$55.00 price target.

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Gildan Activewear (GIL) Company Description:

Gildan Activewear, Inc. engages in the manufacture and sale of printwear and branded apparel. Its products include activewear, underwear, socks, hosiery, and legwear. The firm operates under the brand name Gildan, American Apparel, Comfort Colors, Gold Toe, Anvil, Secret, Silks, Kushyfoot, Peds, and Mossy Oak. The company was founded by Glenn J. Chamandy and H. Gregory Chamandy on May 8, 1984 and is headquartered in Montréal, Canada.