Kontoor Brands has already been one of the stronger apparel stocks of 2026. UBS thinks the rally may be far from finished.

The investment bank reiterated its Buy rating on Kontoor Brands (NYSE: KTB), the company behind Wrangler and Helly Hansen, while raising its price target to $136 from $131.

Based on the stock’s Wednesday closing price, that target implies roughly 67% upside, even after Kontoor shares have already climbed more than 30% this year.

The reason for UBS’s optimism goes beyond strong recent earnings. The firm believes Kontoor is undergoing a transformation that could turn the company from a relatively slow-growing apparel business into a more focused growth story centered around its strongest brands.

And the pending sale of Lee could be the catalyst that accelerates that shift.

UBS Sees Nearly 70% Upside

UBS analyst Mauricio Serna believes Kontoor owns two brands with substantial room to expand across products, sales channels and international markets.

“We believe KTB owns two strong brands with significant [long-term] opportunities across categories, channels, and geographies,” Serna wrote in a note to clients.

Those brands are Wrangler, one of the best-known denim names in America, and Helly Hansen, the outdoor and performance apparel brand Kontoor acquired in 2025.

UBS raised its Kontoor price target to $136, the highest target among analysts tracked by LSEG.

That compares with an average Wall Street price target of approximately $96. Of the 10 analysts covering the company, seven currently rate the shares either Buy or Strong Buy, according to LSEG.

The bullish call comes after Kontoor delivered a strong second quarter and raised its full-year earnings outlook, helping reinforce the argument that its strategy is beginning to work.

The Bigger Story Is What Kontoor Is Selling

One of the most important changes underway at Kontoor is actually a business it plans to get rid of.

In May, the company announced an agreement to sell its Lee denim brand to Authentic Brands Group in a transaction valued at up to $1 billion.

Lee has been part of Kontoor since the company was spun out of VF Corporation in 2019. But selling the brand would dramatically simplify Kontoor’s portfolio and allow management to direct more capital and attention toward Wrangler and Helly Hansen.

UBS believes that could change the way investors value the entire company.

Rather than owning several brands with varying growth profiles, Kontoor would become a more concentrated apparel company built around two businesses that management believes have greater expansion opportunities.

For investors, that distinction matters.

Companies capable of generating sustained mid-single-digit revenue growth, expanding margins and returning excess cash to shareholders can often command higher valuation multiples than slower-growing apparel businesses.

UBS believes Kontoor may be moving toward exactly that profile.

Wrangler Becomes Even More Important

Wrangler is already Kontoor’s flagship brand and one of the most recognizable names in denim.

But the opportunity extends beyond selling more pairs of jeans.

Kontoor has been expanding Wrangler into additional apparel categories while increasing its presence across different retail channels and geographic markets. That gives the company multiple ways to grow the brand without relying exclusively on the traditional U.S. denim market.

Wrangler also benefits from something newer apparel companies can spend enormous amounts of money trying to create: brand recognition.

The name has existed for decades and has deep ties to Western wear, workwear and American culture. If Kontoor can successfully broaden Wrangler’s appeal while maintaining that identity, the brand could become a much larger growth engine for the company.

That potential becomes even more important once Lee leaves the portfolio.

Helly Hansen Adds Another Growth Engine

Then there is Helly Hansen.

Kontoor completed its acquisition of the Norwegian outdoor and workwear company in 2025, giving it exposure to categories far beyond traditional denim.

Helly Hansen sells technical apparel for skiing, sailing, hiking and other outdoor activities, along with professional workwear.

That gives Kontoor access to the global outdoor apparel market while reducing its dependence on denim.

The combination also creates opportunities to use Kontoor’s distribution capabilities and retail relationships to expand Helly Hansen into additional markets.

For UBS, Wrangler and Helly Hansen together form the foundation of the company’s next phase.

The question is whether management can convert those brands into faster and more consistent revenue growth.

How Kontoor Could Become a Growth Stock

UBS sees three major factors potentially driving the transformation.

First is faster sales growth.

Serna believes Kontoor can eventually move from low-single-digit percentage revenue growth toward mid-single-digit growth as Wrangler and Helly Hansen become a larger portion of the business.

Second is margin expansion.

A more favorable product mix, cost savings and greater operating leverage could allow more of each additional dollar of revenue to flow through to earnings.

Third is capital returns.

Kontoor is expected to use its stronger financial position to repurchase shares and reduce debt. Both could increase the amount of value flowing back to shareholders if the underlying businesses continue growing.

“We remain confident KTB can evolve into a growth stock after the pending Lee divestiture,” Serna wrote.

That is arguably the most important part of the UBS thesis.

A $136 price target does not simply depend on Kontoor selling more clothing. It depends on investors eventually viewing the company differently.

Wall Street Is Becoming More Bullish

UBS isn’t alone in seeing upside.

According to LSEG data, analyst coverage of Kontoor currently breaks down as:

2 Strong Buy ratings
5 Buy ratings
2 Hold ratings
1 Underperform rating
0 Sell ratings

The average analyst price target stands near $96, while UBS’s $136 target sits at the top of the range.

That is an important distinction for investors.

The broader analyst consensus remains positive, but UBS is considerably more bullish than the average Wall Street firm. Investors buying into the nearly 70% upside thesis are effectively betting that Kontoor’s transformation will outperform what much of the market currently expects.

The Stock Has Already Had a Strong Year

Kontoor shares have climbed roughly 34% in 2026, including a nearly 3% gain during Thursday’s regular trading session.

The stock rose further following UBS’s bullish call.

That performance means some of the optimism surrounding the company has already been priced into the shares. But UBS believes the market still isn’t fully accounting for what Kontoor could look like after the Lee transaction closes.

The company would emerge with a narrower portfolio, greater exposure to its strongest brands and potentially more flexibility to return capital to shareholders.

If revenue growth accelerates while margins expand, earnings could grow considerably faster than sales.

That is the scenario behind UBS’s $136 target.

What Investors Should Watch

There are still meaningful risks.

Apparel remains a highly competitive and economically sensitive industry. Consumer spending can weaken quickly, fashion preferences change, retailers can reduce inventory, and international expansion does not always translate into profitable growth.

Kontoor also needs to prove that its Helly Hansen acquisition can deliver the expected benefits and that selling Lee won’t sacrifice more earnings power than investors anticipate.

But the company’s recent performance gives bulls more evidence to work with.

Strong quarterly results, a higher earnings outlook, the planned Lee divestiture and increased focus on Wrangler and Helly Hansen have created a noticeably different investment story than Kontoor had just a few years ago.

UBS is betting that Wall Street will eventually recognize that transformation.

At around $84 per share before the latest gains, reaching UBS’s $136 target would represent a dramatic move for a company whose stock has already enjoyed a strong year.

The next phase of the rally will likely depend less on enthusiasm surrounding the restructuring and more on execution.

If Wrangler and Helly Hansen can deliver the faster growth UBS expects, however, Kontoor could prove that its 2026 rally was only the beginning.