HanesBrands Faces Challenges Champion is not a leading sportswear brand

© Reuters. HanesBrands (HBI) Faces Challenges, Champion Not Leading Sportswear Brand – UBS

HanesBrands ( HBI ) faces challenges, according to UBS analysts, who said in a note Thursday that the firm is not optimistic about a possible sale of Champion.

UBS currently has a neutral rating and a $4.50 target price on the stock. Analysts told investors that HBI said it was evaluating strategic options for its Champion business and that a potential asset sale could boost HBI’s share price and reduce its debt load.

However, they note that UBS Evidence Lab’s Global Athletic Wear Survey 2023 indicates that Champion is not a leading sportswear brand.

“This reinforces our view that HBI is unlikely to receive an award for Champion, which would be a major positive catalyst for the stock,” the analysts wrote.

According to the bank’s latest survey, Champion “doesn’t have great brand attributes” and “doesn’t excel in areas such as prestige, innovation or quality”.

Additionally, analysts noted that the survey showed that Champion may be less relevant to consumers compared to other brands.

“We forecast +LSD% long-term EPS CAGR and see downside rather than inflationary risk in our forecast. Moreover, our FY24 EPS estimate is 17% below consensus,” the analysts added.