Hanesbrands (HBI) Stock Forecast & Price Target

Hanesbrands exhibits a promising outlook due to its ability to eliminate $60 million in stranded costs post-sale, translating to a potential $0.15 tailwind to earnings per share (EPS). The company's Innerwear segment showcases a robust 17% EBIT margin, coupled with strong free cash flow generation, indicating a competitive advantage in a less saturated category. Additionally, there is potential for an additional $25 million in interest expense savings if Hanesbrands achieves a full $300 million earnout and pays down debt, further enhancing financial performance.

Hanesbrands faces significant challenges due to a nearly 35% decline in brand revenues domestically and nearly 30% globally over the past two years, highlighting a lack of competitive strength. The company's core brand, Champion, operates in a highly competitive athleticwear market, which poses a risk to its long-term growth plans if the brand does not improve its performance. Additionally, the anticipated modest dilution to earnings per share (EPS) from a recent deal, along with a net $25 million decrease in pretax income, underscores the financial pressures the company is experiencing.