Barclays analyst Adrienne Yih upgraded V.F. Corporation VFC from Equal-Weight to Overweight, raising the price forecast from $19 to $22.
The analyst forecasts that the company will start to experience gradual improvements in its fundamentals over the next four to six quarters, beginning modestly in the fall of 2024.
By the time the analyst anticipates a return to margin expansion and/or sustainable positive sales for the company, the stock has usually risen significantly from its absolute low.
The analyst notes that the early signs of product and brand improvements could signal the start of a multi-year, multifaceted turnaround for the company’s brand portfolio.
While there remains near-term uncertainty, the analyst is optimistic about the sequential (though not yet positive) sales growth at Vans and the gross margin exceeding expectations for the first quarter of 2025, despite margin pressures from efforts to optimize the product and brand portfolio amid declining sales.
The analyst notes that essential foundational steps are being implemented to stabilize and revitalize the business.
In the near term, there is an expectation for ongoing progress in reducing debt, which would enhance the company’s operational flexibility. Additionally, the analyst forecasts that the recent leadership hires will begin to have a significant impact on the business within six to twelve months.
The analyst’s updated adjusted earnings per share (EPS) estimates for FY25, FY26, and FY27 are $0.35, $1.04, and $1.56, revised from previous estimates of $0.23, $1.03, and $1.57, respectively.
Price Action: VFC shares are trading higher by 5% to $19.32 at last check Wednesday.
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