08:41 AM EDT, 04/23/2024 (MT Newswires) -- National Bank maintained its "outperform" rating and $58 target price on Gildan Activewear ( GIL ) after the company yesterday moved to refresh its board and said interest remains in buying it out.

According to National Bank, the appointment of five new board members effective May 1 "should address investor concerns." It noted Gildan announced five new directors, replacing five existing directors, effective May 1. Gildan has also recommended two Browning West nominees. Also, National Bank noted, the board confirmed that external interest in acquiring Gildan remains though a decision is not expected before the Annual Meeting on May 28.

The refreshed board slate did not include Glenn Chamandy (Gildan's former President and CEO) and Browning West's co-founder/partner (as recommended by Browning West). The bank said: "We believe the board refreshment should address select investor concerns including proper evaluation of executive performance and possible privatization deals."

National Bank said while investor focus is currently on management changes and shareholder activism, outside an acquisition, the bank's view is that earnings performance and the macroeconomic outlook will drive the stock.

National's price target reflects 50% weighting in Gildan continuing as a public company and 50% takeout likelihood. The bank continues to value Gildan's ongoing operations at 11.5 times its FY25-26 EPS (adjusted for F/X). National assumes a potential

acquisition price of C$63, at the midpoint of its takeout range. It noted Gildan trades at 11.6 times its Next Twelve Months (NTM) EPS compared to the five-year average of 15.8 times.

Gildan shares fell 1.2% yesterday to close at $47.83.