BRBR - Weight loss drugs seen providing a boost to apparel stocks - Stifel

2023-12-02 14:15:00 ET

Increasingly popular weight loss drugs are not only benefitting individuals by reducing their waist lines. They could be a boon to apparel names.

Based on a recent proprietary survey, Stifel believes that shedding pounds could impact spending trends, and in particular, with clothing.

Its survey of consumers found that found 15% of respondents are on GLP-1 medications. Examples of these drugs are Eli Lilly's ( LLY ) Mounjaro (tirzepatide) and Novo Nordisk's ( NVO ) Wegovy (semaglutide) and Ozempic (semaglutide).

While only Wegovy is FDA-approved for weight loss, Mounjaro is expected to gain that indication shortly and was recently buoyed by a real-world study against Wegovy . The Stifel survey found an additional 21% would be interested in taking a GLP-1 drug if additional ones gained US FDA approval and were further demonstrated to work effectively.

Stifel's Jim Duffy mentioned several retail names he sees as potential beneficiaries of greater GLP-1 uptake: Lululemon ( NASDAQ: LULU ), Levi's ( LEVI ), Kontoor Brands ( KTB ), and Dick's Sporting Goods ( DKS ).

Duffy told Yahoo! Finance in a recent interview that individuals who stick with a weight loss drug and lose considerable weight would need new clothes "and would spend double the amount of apparel on an annual basis." He added that could lead to a low- to mid-single digit benefit to apparel spend, though focused on particular brands.

Based on the results, Duffy believes other industries could benefit from greater weight loss drug use. "By sector/category, GLP-1 usage is most beneficial for energy drinks, convenient nutrition, and apparel and active lifestyle nutrition."

That could be good news for names like Celsius Holdings ( CELH ), Monster Beverage ( NASDAQ: MNST ), The Simply Good Foods Company ( SMPL ), BellRing Brands ( BRBR ), Mondelez International ( NASDAQ: MDLZ ) (owner of Clif Bar), General Mills ( NYSE: GIS ) (several protein bar brands), and WK Kellogg (protein bars).

More on Kontoor Brands, Levi Strauss, etc.

• Lululemon: Set To Outperform Yet Again In 2024
• Lululemon: Powerful Growth Story, But Shares Near Fair Value With Technical Resistance
• Kontoor Brands upgraded at Barclays on market share gains
• Athletic apparel race: Lululemon is picked over Nike and Under Armour by Truist

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