Consumer Spec - Pre Market Wrap
NKE (-), STZ (+) Pre | KR Buys Giant Eagle, PM ZYN MRTP, EL Goldman Conviction, MUSA Upgraded Buy, BIRK Launched OP, PZZA CFO Shuffle Pre, Warsh Sintra Wednesday, FUN Wait-Times +39%
Consumer Spec Vacation schedule:
Tomorrow is the last post of the week.
No posts July 6th - July 10th
Europe consumer sectors are negative pre- market and in the US the main focus today is on NKE report, where 1H27 guidance came in below and management noted they don’t expect operating environment to improve over next six month. After trading at $37 during the call the stock recovered into the $40s with analysts dividing between negative views and bottom hunting calls.
Both GIS (+4%) and STZ (+2%) cleared lower bars. Elsewhere, MUSA upgraded Buy at Jefferies to $625, BIRK launched Outperform at RayJay $52, Goldman adds EL to Conviction List, reiterates PM on ZYN MRTP. KR -2% on Giant Eagle deal, PZZA -5% on CFO shuffle. Warsh Sintra Wednesday looms.
MACRO & MARKETS
US MACRO (EVERCORE ISI): WARSH SINTRA SPEECH WEDNESDAY FIRST POST-FOMC WINDOW INTO NEW FED THINKING
The firm expects Fed Chair Warsh’s Wednesday appearance at the ECB’s Sintra conference to start fleshing out his strategy, framing July as strategy-dependent rather than data-dependent given only one inflation print remains; if Warsh concludes he must hike to establish credibility and that this requires at least two moves, there is a case to move in July and September to clear it well before midterms. The firm’s read is that Warsh is not yet convinced he needs to hike and will let July fade, consistent with recent commentary from Bessent and Williams.
Warsh is characterized as more focused on inflation than employment, more forward-looking on the medium-term horizon, and less committed to rate smoothing, with a two-phase framework of first establishing hawkish credibility on inflation, then a potential pivot lower supported by task force work on AI, inflation measurement, and the balance sheet.
US EQUITY STRATEGY (BOFA): SELL SIDE INDICATOR AT 56.2%, HIGHEST SINCE FEB ‘25
The firm’s Sell Side Indicator holds at 56.2%, the highest reading since February 2025 and still Neutral, but the skew has turned cautious with distance to the Sell signal at just 1.3ppt versus 4.9ppt to Buy.
At current levels, next-12-month S&P returns have been negative 32% of the time since 1985 versus 18% overall, though the model still implies roughly 12% upside and remains the firm’s most bullish year-end indicator. June internals were unusually broad: Mag 7 averaged -9% while the average S&P stock rose 2% and 66% of constituents beat the cap-weighted index, a 99th percentile month since 1986. The firm’s economists now forecast three Fed hikes in 2026, and higher-for-longer conditions are seen constraining Tech buyback and capex flexibility just as the AI capex cycle accelerates, alongside moderating liquidity support and waning FCF relative to earnings. Year-end S&P target stays 7100, with preferred positioning in large-cap value and cyclicals over long-duration secular growth given lower expectations, stronger capital discipline, and inflation sensitivity.
CONSUMER STREET RESEARCH
Upgrades
Murphy USA (MUSA) Raised to Buy at Jefferies; PT $625
Downgrades
No downgrades in consumer sector today
Initiations
Birkenstock (BIRK) Rated New Outperform at Raymond James; PT $52
Cava Group (CAVA) Rated New Hold at Freedom Capital; PT $95
Dutch Bros (BROS) Rated New Buy at Freedom Capital; PT $95
Dutch Bros (BROS) Rated New Buy at Freedom Finance; PT $95
El Pollo Loco (LOCO) Rated New Buy at Freedom Capital; PT $22
First Watch Restaurant (FWRG) Rated New Buy at Freedom Capital; PT $17
First Watch Restaurant (FWRG) Rated New Buy at Freedom Finance; PT $17
Kura Sushi (KRUS) Rated New Hold at Freedom Capital; PT $68
EARNINGS REPORTS
NKE -2%: RECOVERY IS NO CLOSER GIVING BEARS CONFIDENCE TO STAY SHORT/UNDERWEIGHT
Headline EPS did beat but entirely on a one-time IEEPA tariff recovery, and the cautious H1 revenue guide is driving the negative reaction. Q4 EPS was $0.72 (vs $0.12 cons), including a $0.52 benefit from the expected IEEPA tariff recovery. Revenue was $10.97B (vs $10.85B cons), down 1% reported and down 4% currency-neutral. Gross margin was 49.2% including the ~900bps tariff benefit, but only ~39.2% excluding it (vs SA 39.9%), a slight miss. North America sales missed ($4.83B vs SA $4.88B) and NIKE Direct fell 9% ex-FX, while Greater China declined 17% ex-FX. Bar was low with investors underweight/short, but company noted a deceleration in retail sales trends starting in mid-April, driven by pressure on consumer traffic and discretionary spending across geographies. That drove a reduced revenue outlook for the F4Q26-F2Q27 period to down LSD-MSD from down LSD previously to reflect softer recent sell-through and a more cautious view of the consumer backdrop. Management does not expect the operating environment to improve meaningfully over the next six months.
1. Key Takeaways
Quality-of-beat mixed: headline EPS is optically explosive but $0.52 of the $0.72 is one-time tariff recovery; ex-refund $0.20 vs Street $0.12 is the real beat, driven by SG&A discipline (-1.6% y/y vs Street -0.5%) and GM ex-tariff being better than guided.
Sales guide cut, EPS guide held: F4Q26-F2Q27 revenue now down LSD-MSD (vs prior down LSD), but mgmt held flat EPS ex-refunds for the same period. F1Q27 revenue guided down LSD-MSD (vs Street -1.8%), GM up slightly y/y (vs Street -20 to -50bps), SG&A flat (vs Street -0.5%).
GM inflection pulled forward one quarter: mgmt now expects GM expansion to begin F1Q27 (vs prior F2Q27), driven by tighter inventory, cost actions, and lapping ~19% IEEPA tariff rates. Guide assumes incremental 10% tariff through July, 15% thereafter.
Two speeds intra-quarter: strong March (especially NA) followed by mid-April deceleration, then June improvement on World Cup momentum. NKE flagged this as the first cracks in consumer spending across the softlines coverage universe; peers will confirm or refute in calendar 2Q prints.
Performance vs Sportswear divergence continues: Running +DD 5th straight q (added ~$1B revenue this year), global football and golf +DD, Training/Basketball/ACG down in Q4 but expected to inflect in FY27. Sportswear -DD and Jordan Streetwear -5% FY26 remain the drag, together ~50% of the business; mgmt is teeing up 12+ new Sportswear styles in F2H27 with Wholesale partner input.
Foot Locker sell-through positive y/y for first time in 4 years: material signal on the wholesale rebuild given FL is NKE’s largest wholesale partner. NA Wholesale +10% (with benefit from lower returns, reserves, discounts, cancellations, not just sell-in), DTC -9% cc worse than F3Q -7%.
China: profitability before revenue: -17% cc, worsened from F3Q -10%, with Wholesale -19% and DTC -14% (Digital -25%). Deliberate sell-in reduction to clean marketplace; in-season sell-through improved q/q and full-price realization better, but no near-term revenue inflection. Mgmt targets profitability inflection before sales.
EMEA remains challenged: -6% cc with inventory +LDD, elevated promos, Mid-East disruption, and heavier Sportswear mix. Continued reset expected in F1Q27.
Inventory watch: Barclays IM Spread went to -86bps from +207bps prior q (first quarter of negative sales-to-inventory growth); GMROI worsened for the 8th straight quarter. Consistent with the F1H27 reset narrative but a KPI to watch.
Tariff exposure: FY25 NKE brand footwear production 51% Vietnam, 28% Indonesia, 17% China; apparel 31% Vietnam, 15% China, 15% Cambodia.
Catalyst set: Investor Day Nov 16-17 with expected detailed FY27 guide and new LT framework (new CFO ~3 months into role by then).
2. KPIs vs. Street
Revenue: $10.972B, -1.1% y/y reported / -4% cc (last q -0.4% cc) vs Street $10.849B, -2.2% — beat by 1.1%.
Constant-FX Revenue Growth: -4% cc vs -3% in F3Q26 — worsened sequentially.
Gross Margin (reported): 49.2%, +890bps y/y vs Street ~40.0% — includes ~900bps IEEPA tariff refund benefit.
Gross Margin (ex-refund): 40.2%, -10bps y/y vs guide down 25-75bps — modest beat vs guide, in line to slightly better than Street.
SG&A: 37.2% of sales, -18bps y/y vs Street 37.7-38.0% — beat, driven by demand creation -4% and operating overhead -1%.
Operating Margin (ex-refund): 3.0% vs Street 2.0% — beat by ~100bps.
Adj EPS (ex-refund): $0.20 vs Street $0.12 — beat by $0.08.
GAAP EPS: $0.72 vs Street $0.12 — includes $0.52 tariff refund benefit.
NA Revenue: $4.832B, +3% cc (last q +3% cc) vs Street $4.865B, +3.5% — small miss; Wholesale +10%, DTC -6% (Stores -5%, Digital -7%).
EMEA Revenue: $2.975B, -6% cc (last q -7% cc) vs Street -5% to -6% cc — roughly in line; Wholesale -1%, DTC -16% (Digital -24%).
Greater China Revenue: $1.297B, -17% cc (last q -10% cc) vs Street -18% to -21.7% cc — less bad than feared but sequential deterioration; Wholesale -19%, DTC -14%.
APLA Revenue: $1.596B, -1% cc (last q -2% cc) vs Street -1.1% to -1.6% cc — modest beat.
Wholesale Revenue: +1% cc (reported +3.7%) — primarily driven by NA, partially offset by China.
DTC Revenue: -9% cc (last q -7% cc) — worsened; Stores -7%, Digital -12%.
Footwear: $7.103B, -1.1% vs Street -1.5% — beat.
Apparel: $3.046B, +1.5% vs Street -0.2% — beat, +170bps.
Equipment: $551M, -2.8% vs Street -0.3% — miss.
Price/Volume Mix: not explicitly disclosed; qualitative color suggests improved full-price realization in China Digital and NA Running, offset by promotional pressure in EMEA and Sportswear.
Inventory: +0.2% y/y F26 exit; EMEA specifically +LDD; Barclays IM Spread -86bps (deteriorated from +207bps prior q).
F1Q27 Revenue Guide: down LSD-MSD ex-FX vs Street -1.8%.
F1Q27 GM Guide: up slightly y/y vs Street -20 to -50bps — inflection pulled forward one quarter.
F1Q27 SG&A Guide: flat y/y vs Street -0.5%; operating overhead down, demand creation +HSD on World Cup.
F1Q27 EPS Implied: $0.38-0.53 vs Street ~$0.46 (Needham $0.44, RJ mid $0.45).
F4Q26-F2Q27 Revenue Guide: down LSD-MSD vs prior down LSD — LOWERED.
F4Q26-F2Q27 EPS Guide: flat y/y ex-refunds — UNCHANGED.
Tariff Assumption: incremental 10% through July, 15% thereafter (vs ~19% IEEPA under prior regime).
3. Bull vs. Bear Debate
Bulls argue this is the classic ugly-but-necessary reset print in a multi-year turnaround under a credible CEO (Elliott Hill), where sales pain is being self-inflicted (China sell-in cut, Sportswear over-distribution wound down, marketplace cleaning at Foot Locker) precisely because it’s the prerequisite to a healthier margin structure and premium brand positioning. The green shoots are real and measurable: Running +DD five straight quarters adding ~$1B in revenue, Foot Locker sell-through positive y/y for the first time in four years (a meaningful data point on the wholesale rebuild), NA Wholesale +10%, GM inflection pulled forward one quarter to F1Q27, and SG&A discipline delivering EBIT ex-refund of 3.0% vs Street 2.0%. Bulls point to the ex-refund $0.20 EPS beating Street $0.12 as the clean number that matters, and note mgmt held flat EPS guidance for F4Q26-F2Q27 despite cutting revenue, implying real conviction on margin recovery.
Bears counter that the “green shoots” narrative has been running for four quarters now with the stock down from $80 to $41, and the operative question is not whether NKE bottoms but whether the recovery slope justifies current multiples. Sportswear and Jordan Streetwear (~50% of the business) remain down DD with growth not expected in FY27, and F2H27 depends entirely on newness that hasn’t launched. NA Wholesale +10% flatters the underlying story because it benefited from lower returns/reserves/discounts/cancellations rather than pure sell-in strength, and NA Wholesale faces very tough F2Q27 comps (F2Q26 NA was +8.8% with Wholesale +24%) making negative growth in F2Q27 plausible per RJ. DTC deteriorated to -9% cc from -7% F3Q, China worsened to -17% cc from -10% F3Q with no near-term inflection, and EMEA remains in Barclays’ “TRAP” phase with inventory building.
What Changed This Quarter: Sales guide cut, EPS guide held; GM inflection pulled forward one quarter to F1Q27 (positive); China worsened to -17% cc (negative); NA held +3% but is entering tougher comps (Barclays flags NA transitioning to the “HUNT” phase but with weakening momentum); Sportswear turnaround pushed further into F2H27 with recovery dependent on unlaunched product; Foot Locker sell-through inflection is the single new bull data point; and the Nov 16-17 Investor Day becomes the next major catalyst.
Broker Ratings & Setup Summary
Needham (Tom Nikic) — HOLD, no PT: Sidelined; “green shoots not enough to offset headwinds.” FY27 EPS trimmed to $1.74 (from $1.72), FY28 to $2.00 (from $2.02). Bull case ~$70 (150-200bps GM/yr, FY28 EPS ~$2.50); base at mid-20s P/E on $1.74; bear ~$30 (high-teens P/E on $1.50-1.75 EPS). Most negative on China (15% of revs) and lengthy CEO turnaround timeline. Rating cut to HOLD on 1/8/26 from BUY.
Raymond James (Rick Patel) — Market Perform 3, NM PT: On sidelines, “lack confidence in upside potential.” FY27 EPS raised to $1.76 (from $1.85) primarily on higher GM/lower SG&A offsetting revenue cut; FY28 $2.12 (from $2.20). Views F2Q27 as likely trough. Encouraged by GM inflection and Foot Locker sell-through but not enough on China/EMEA. Cautious that NA Wholesale faces tough F2Q comps and Sportswear turnaround depends on unlaunched product.
BofA (Lorraine Hutchinson) — NEUTRAL, PO $47 (lowered from $55): 22x FY28 EPS (was 27x) to reflect slower turnaround progress, in line with retail recovery stocks at 20-22x. FY27 EPS unchanged at $1.60, FY28 raised to $2.13 (from $2.00) on lower SG&A. “Estimates nearing a bottom but path to clean sales re-acceleration uncertain.” Most cautious on China/Sportswear normalization timing.
Barclays (Adrienne Yih) — OVERWEIGHT, PT $52 (lowered from $67): Most constructive; 25x (from 28x) CY28 EPS $2.08. Upside $57 / downside $28. FY27 EPS cut to $1.55 (from $1.82), FY28 to $1.90 (from $2.19). PRISM curve framework: NA in “HUNT” phase (strategically offensive), China and EMEA in “TRAP” phase. KPI dashboard scores turnaround 2.2/5 (weakening). “The only way out is through” — argues rebasing on healthier margins is the necessary first step even if painful.
Consensus takeaway across desks: F1Q27 is the last quarter of top-line pain before things “less bad”, F2Q27 is the trough on comps, GM inflection is the near-term positive. Nobody sees enough catalyst to be a hero into the print.
STZ +1.3%: TOP AND BOTTOM LINE BEAT ALONGSIDE MUTED EXPECTATIONS
Clean beat vs a lowered bar. Beer depletions -0.3% roughly in line with de-risked consensus (-0.2%), shipments +1.8% built inventory ahead of World Cup, and FY27 EPS guide of $11.20-$11.90 reiterated. Positive setup for a relief rally as consumer pressure narrative fully priced into the tape entering the print.
1. Key Takeaways
Depletions in line with the reset bar, not the original bar: -0.3% is roughly in line with -0.2% Street and buyside flat to -1%, but Street had moved lower into the print. Original expectations coming out of F4Q26 were closer to flat-to-slightly-positive; the tape is trading the delta vs the reset bar, which is neutral-to-slightly positive.
Beat quality is mixed but positive: sales beat driven primarily by shipments +1.8% (vs +0.1% Street) with pricing +0.8% and mix -0.4% (in line). Margin beat driven by lower beer D&A ($77M vs BofAe $90M as Veracruz brewery D&A begins mid-year), lower SG&A, lower interest expense, and lower tax rate (18.8% vs 20% guide). Below-the-line contributed ~$0.10 to EPS (interest and tax each ~$0.05 per MS).
FY27 guide reiterated but consensus positioned at high end: EPS guide $11.20-$11.90 vs Street $11.74-$11.77. Jefferies flags consensus may need to edge down as beer marketing investments ramp in F2Q/F3Q (>10% of sales vs FY ~9.5%) and incentive comp steps up.
Brand-level dispersion widening: Modelo Especial -2%, Corona Extra -5%, offset by Pacifico +21%, Victoria +14%, Modelo Chelada +6%. Pacifico contribution accelerating but Modelo/Corona are the swing factors on any FY27 downside scenario.
Intra-quarter cadence: strong March, softer April/May on higher gasoline prices and continued (but moderating) Hispanic consumer pressure, June improving on World Cup. Nielsen through 2 weeks ended 6/13 showed retail volumes -0.6% y/y. World Cup ends in <3 weeks per MS commentary, setting up tougher next-year comps.
On-premise +1.3%, off-premise -0.5%: draft distribution expansion for Modelo Especial and Pacifico driving on-premise; off-premise still pressured by Hispanic zip code weakness though moderating.
W&S materially better: organic +7.7% vs -21% comp, depletions +6.6% led by Kim Crawford +4% and Mi CAMPO +62%. Sales $149M beat Street $142M by 5.2%. OI slight loss (-$1.1M vs Street +$0.3M).
Capital return continues: $324M buybacks FYTD through June, ~1.3% of market cap. CFO $2.4-$2.5B guide and FCF $1.6-$1.7B guide both below consensus ($2.7B and $1.8B respectively) but this is optics of the buyback runway, not a fundamental concern.
New CEO Nick Fink white-space commentary: incoming CEO’s remarks on capital allocation and portfolio opportunities will be the call focal point tomorrow morning at 8am ET.
Marketing cadence explicitly disclosed: FY27 ~9.5% of sales, but F2Q/F3Q >10% of sales, with larger y/y OM declines in F2Q/F3Q than FY average (-50bps midpoint). Sets up a “back-half margin normalization” narrative that could be either the bull or bear pivot depending on Q2 print.
Broker Ratings & Setup Summary
BofA (Peter Galbo) — UNDERPERFORM, PO $152 (unchanged): Most bearish framework at 12.5x CY27e EPS. Views the print as a “slower start to the year than hoped from a consumption standpoint” with the operating environment “remaining choppy.” Acknowledges reiterated FY27 and in-line depletions “could lead to some minor relief rally for shares tomorrow.” Key call focus is 2Q ships-to-depletes timing and June consumption trends (Nielsen data through 6/13 showed retail volumes -0.6% y/y). Notes the “STZ is cheap” argument as unwarranted given multiple premium to domestic peer despite sub-peer growth.
Jefferies (Kaumil Gajrawala) — HOLD, PT $157 (+13% upside): Neutral framing: “strong top/bottom-line results, but negative beer depletions (-0.3%) suggest they are not out of the woods.” Explicitly flags consensus at high end of guide range ($11.75 vs $11.20-$11.90) and expects it to “edge down as beer investments ramp up in 2-3Q.” Views Modelo (-2%) and Corona (-5%) as the “key swing factor.” PT trajectory: cut from BUY to HOLD in Jan 2025 ($201), stepped down through 2025-2026 to $157 (June 23, 2026). Most cautious on brand-level dispersion.
Morgan Stanley (Dara Mohsenian) — Equal-weight, PT $183 (+31% upside): Most bullish PT despite EW rating. Explicitly calls “positive stock reaction to STZ’s F1Q beat and reiterated FY27 guidance” with “meaningful upside” flagged in reaction-to-earnings framework. PT based on 14.5x CY27 P/E, a discount to STZ’s 17.5x L5Y avg NTM P/E to reflect structural alcohol headwinds and mature portfolio. “Glass half full short-term with declining gasoline prices, improved STZ market share trends in scanner data, and moderating social pressures on STZ’s Hispanic consumers.” Longer-term EW on structural concerns. Highlights $324M FYTD buybacks (~1.3% mkt cap) as ongoing tailwind.
GIS +4%: TOP AND BOTTOM LINE UPSIDE WITH FY27 GUIDANCE POINTING TO BETTER ORGANIC GROWTH AND A MORE AGGRESSIVE COST-SAVINGS RESET
Expectations were very low into the print with most investors short/underweight packaged food, so this should read as a relief.
EPS was $0.95 (vs $0.80 cons) and revenue was $4.61B (vs $4.59B cons), with Q4 organic net sales flat and adjusted operating profit up 13% in constant currency on a 160 bps margin expansion to 15.3%.
FY27 EPS guidance of $3.00-$3.20 (vs $3.13 cons) brackets consensus, with organic net sales of -1.5% to +0.5% and adjusted operating profit down 8-13% cc.
CEO Harmening: "our focus in fiscal 2027 is to improve our topline growth by driving a step change in the remarkability of our brands," while "targeting $3 billion in cumulative cost savings by fiscal 2030."
ANALYST RESEARCH & NEWS
MUSA: JEFFERIES UPGRADES TO BUY, PT RAISED TO $625 FROM $550 ON FUEL MARGIN AND EBITDA UPSIDE
Jefferies upgraded Murphy USA to Buy from Hold with a $625 target (from $550). The firm says improving fuel margins and stronger execution drive a materially higher EBITDA outlook, with estimates now roughly 20 to 25 percent above initial 2026 to 2028 guidance and targets pulled forward. The firm flags Q2 fuel margins at 36c and roughly 50 new stores per year as durable growth levers, with shares down more than 10 percent from recent highs viewed as an attractive entry. The updated model points to EBITDA of roughly $1.24B/$1.14B/$1.18B across 2026 to 2028 versus the company’s original $1.00B/$1.03B/$1.06B outlook, implying MUSA achieves its long-term EBITDA targets well ahead of schedule; the firm’s conviction has increased under new CEO Mindy West and CFO Donnie Smith following its Nantucket Conference meetings.
KR -2%...announced a definitive agreement to acquire family-owned Giant Eagle for a purchase price of $1.65 billion, comprising $1.25 billion in cash and roughly $400 million in assumed liabilities, adding approximately $9 billion in annual sales across 197 supermarkets and 11 standalone pharmacies in five states. The all-cash transaction reflects Kroger's disciplined capital allocation, preserving its 2.3–2.5x net debt/adjusted EBITDA target, dividend, and $2 billion buyback. Management expects accretion to adjusted EPS in the second full year post-close, with limited store divestitures anticipated for regulatory clearance. Closing is targeted for 2027, subject to customary conditions and approvals.
MAR, KO: GLOBAL BEVERAGE SUPPLY AGREEMENT COVERS ~10,000 PROPERTIES IN 146 COUNTRIES
Marriott and Coca-Cola announced a global beverage supply agreement making Coca-Cola the hotelier’s global beverage partner across carbonated soft drinks, hydration, and functional beverages, with rollout beginning July 1 across roughly 10,000 properties in 146 countries over the coming months. Coca-Cola products will populate guestrooms, restaurants, lounges, and meetings/events, structured through Marriott’s Hot Shoppe Services International procurement arm. Marriott CEO Anthony Capuano frames the deal around better meeting guest preferences and creating economic benefits for owners and franchise operators; Coca-Cola CEO Henrique Braun emphasizes options across sparkling, juices, hydration, and dairy. Read-through: durable systemwide share win for KO amid ongoing channel fragmentation and functional beverage encroachment, with modest owner-level procurement benefit for MAR franchisees; the deal reinforces KO’s global on-premise moat versus PEP in a category where large hotel contracts anchor multi-year volume.
PZZA -5%...as management transition tempers takeout hopes. Papa Johns announced a CFO transition, with Chris Collins, SVP of Corporate Finance and Principal Accounting Officer, appointed interim CFO effective immediately. Collins succeeds Ravi Thanawala, who is departing for a CFO role at another public company but will advise through July 31, 2026. A search for a permanent CFO is underway.
PM: GOLDMAN REITERATES BUY AFTER FDA GRANTS MRTP STATUS FOR ZYN
The firm views the FDA’s Modified Risk Tobacco Product authorization for ZYN as a positive catalyst, allowing certain pouches to be marketed with risk-modification claims citing lower relative risk versus cigarettes for mouth cancer, heart disease, and lung cancer. The analyst sees a competitive advantage for PM while also creating a “halo effect” across the broader nicotine pouch category as consumers better appreciate reduced harm exposure, accelerating ZYN’s global growth trajectory. Bottom line, the firm sees a pathway for strong top and bottom-line growth over the next several years given the compounding effect of IQOS and ZYN, with the stock trading at roughly a 14% discount to growth staples peers despite faster top and bottom-line growth. PM remains one of the firm’s top ideas across broader Staples.
EL: GOLDMAN ADDS TO US CONVICTION LIST
The firm adds EL to its US Conviction List, arguing the company is heading into a positive innovation-driven topline inflection that is underappreciated in a prestige beauty market driven by innovation. The analyst looks for revenue growth, an improving China business, and internal initiatives to drive 450bp of margin expansion over the next three years, alleviating investor concerns around value-dilutive M&A and paving the way for multiple expansion as confidence returns to the historical high-end leader.
BIRK: RAYMOND JAMES INITIATES AT OUTPERFORM, PT 52
The firm launches coverage on BIRK at Outperform with a 52 price target, framing the 1774-founded name as a growth story trading at attractive valuation, with revenue estimated at +11.0% in FY26 and +12.8% in FY27 versus a Softlines peer CAGR of +8%. The analyst highlights industry-leading ~30% EBITDA margins despite FX/tariff pressure, greater than 90% full-price sell-through, and multiple drivers including new DC capacity, category diversification into closed-toe, ~10% unit CAGR, and ASP gains of 3 to 5% annually, with global runway spanning deeper Americas penetration and DTC, an EMEA return to growth post marketplace cleanup, and Asia-Pacific with potential to double. Wholesale should lead growth as a capital-light customer acquisition channel while DTC captures repeat business and drives LTV, with strong FCF fueling buybacks.
LEVI: BOFA REITERATES BUY INTO 2Q26 PRINT, PO 27
BofA maintains Buy with a 27 price objective ahead of the 7/8 F2Q26 print, modeling EPS of 0.23 versus Visible Alpha consensus 0.24 and 2Q sales growth of 3% ccy, with underlying DTC-led momentum partly offset by a 200bp Europe wholesale timing headwind (~30mn shift from 2Q into 1Q). The analyst sees GM upside from lower tariff rates in effect since 2/24 that are not embedded in guidance but should begin flowing through in 2Q and ramp into 2H, worth ~35mn COGS/7c EPS on a full-year basis if rates hold, with an additional 80mn in potential tariff refunds as further cushion. At ~15x 27E P/E, the firm sees a compelling entry to own a brand in the early stages of a transition to higher-quality, consistent growth, with a path toward MSD%+ sales growth and EBIT margin expansion toward the 15% long-term target.
FUN: UBS EVIDENCE LAB WAIT-TIME DATA TRACKING +39% YOY IN 2Q, WELL ABOVE BUY-SIDE
The firm’s Evidence Lab amusement park wait-time monitor is running +39% YoY on average across Six Flags parks Q2-to-date, materially above the buy-side’s assumed +3 to 3.5% attendance growth range and cutting through the consensus debate over parks-sales inclusion. May was the peak at +53% YoY, with June decelerating to +32% through the first three weeks, and weekend data shows a similar pattern of April +30%, May +39%, June +24%, directionally softer but firmly positive. The analyst flags Memorial Day weekend weather noise as limiting the signal from the June deceleration. PT stays 30 with Buy maintained, and the firm also highlights cost management at FUN as a separate, underappreciated driver of incremental margin regardless of where demand ultimately shakes out.
Thanks for reading! If you enjoyed Consumer Spec, we’d appreciate you sharing it.
EARNINGS CALENDAR
