Hanesbrands Drops 6% as Wells Fargo Double Downgrades to Underweight By Investing.com

By Senad Karaahmetovic

Wells Fargo analysts double-downgraded Hanesbrands Inc (NYSE:) to Underweight from Overweight with a price target of $5 per share, down from the prior $13.

The analysts highlighted 4 factors behind the downgrade call.

1. Estimates slashed; now sitting well below Street;
2. Potential headwinds via the company’s debt/leverage position;
3. Risk of breaching leverage ratio debt covenants; and
4. Refinancing risk on the horizon.

They believe that these challenges are likely to send HBI shares “lower over the medium term as numbers likely continue to come down.”

Many of these challenges are out of the new management’s control, which is praised by the analysts for creating a strategy to turn the business around.

“We expect the market to react cynically until we receive more clarity on fundamentals,” they concluded.

Shares of Hanesbrands, which owns clothing brands like Hanes, Champion, Playtex, etc., are down nearly 7% today.