Gildan Activewear: RBC Capital maintains Outperform, raises PT to $68 from $61.

Gildan Activewear: RBC Capital maintains Outperform, raises PT to $68 from $61.

RBC Capital Markets has maintained its Outperform rating on Gildan Activewear Inc. (GIL) stock but has raised its price target to $68 from $61. The revised target reflects the firm's bullish outlook on the company's strategic initiatives and robust financial performance.

Gildan's stock has been on a strong upward trend, reaching an all-time high of $55.50 in recent trading sessions. Over the past 12 months, the stock price has appreciated by 32.04%, highlighting the company's solid performance. RBC Capital's latest analysis underscores the company's strategic initiatives and financial health, noting that the stock trades at a P/E ratio of 15.5x and has demonstrated strong revenue growth of 4.12% in the past year.

The firm's latest move comes as Gildan announced a definitive merger agreement to acquire HanesBrands Inc. (HBI) in a transaction valued at approximately $4.4 billion. The acquisition deal, which needs shareholder and regulatory approval, represents a premium of about 24% to HanesBrands' closing price on August 11. RBC Capital's analysts anticipate that the acquisition will enhance Gildan's product offerings and reach more consumers, driving further growth.

Gildan's second-quarter results also contributed to the positive sentiment. The company reported earnings per share of $0.97, surpassing last year's $0.74 and exceeding consensus estimates by $0.01. Revenue reached $919 million, surpassing estimates by $13 million and improving from the previous year's $862 million.

RBC Capital's new price target reflects the company's strong business execution and the potential for further growth. The firm's analysts expect the acquisition to be immediately accretive to Gildan's adjusted per-share earnings and add 20% to the metric on a pro forma basis. The Canadian apparel manufacturer anticipates annual run-rate cost synergies of at least $200 million within three years.

Gildan's stock has seen significant appreciation in recent months, and RBC Capital's revised price target of $68 underscores the firm's confidence in the company's future prospects. Investors should closely monitor the progress of the HanesBrands acquisition and Gildan's ongoing strategic initiatives to gauge the potential for further growth.

References:
[1] https://www.investing.com/news/company-news/gildan-activewear-stock-hits-alltime-high-at-555-usd-93CH-4188802
[2] https://finance.yahoo.com/news/gildan-activewear-strikes-2-2-132132140.html