UBS has raised its price target for Kontoor Brands Inc. by 62%, citing the planned divestment of its Lee Jeans brand as a key catalyst for the apparel company’s valuation.
The Swiss bank maintained a Buy rating on Kontoor, whose shares have gained more than 35% year-to-date following the announcement of the Lee divestment. The transaction is expected to unlock value by simplifying Kontoor’s business model and reducing operational complexity.
UBS analysts highlighted the strategic rationale behind the Lee sale, noting that the brand’s performance had lagged behind Kontoor’s other core label, Wrangler. The divestment is anticipated to improve margins and focus management on higher-growth segments within the denim market.
The Lee Jeans brand, which has faced competitive pressure in recent years, will be sold to a private equity consortium led by Blackstone, according to reports. The deal is subject to regulatory approval and is expected to close by mid-2027.
Kontoor Brands, which also owns the Wrangler and Rock & Republic brands, has been pursuing a portfolio review to enhance shareholder value. The company’s shares rose 2.1% in premarket trading following the UBS upgrade, extending gains from the prior session.
UBS’s revised price target of $32 per share implies a 62% premium to Kontoor’s closing price on Friday. The bank cited improved operational efficiency and potential cost savings as additional drivers of the valuation increase.
Analysts emphasized that the Lee divestment could serve as a template for further strategic actions, including potential acquisitions or divestitures, to optimize Kontoor’s brand portfolio. The company has not yet provided an update on its capital allocation plans post-transaction.
