Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Thursday, BNP Paribas (OTC:BNPQY) Exane maintained its Neutral rating on VF Corp (NYSE:VFC) shares but reduced the price target significantly from $25.00 to $11.00. The adjustment follows the company’s fourth-quarter earnings report, which showed revenues in line with expectations and better-than-anticipated earnings before interest and taxes (EBIT) and earnings per share (EPS). Trading at a P/E ratio of -25x and generating an 8% free cash flow yield, InvestingPro analysis suggests the stock is currently undervalued. Despite these positive aspects, the firm’s free cash flow (FCF) did not meet expectations, and revenues from the Vans brand saw a slowdown in the fourth quarter.
The analyst from BNP Paribas Exane, Laurent Vasilescu, provided insights on the company’s performance, noting that while VF Corp’s quarterly results showed some strengths, the key indicators for a turnaround appeared weaker. According to InvestingPro data, VF Corp maintains a remarkable 55-year streak of consecutive dividend payments, despite the challenging macroeconomic environment that continues to impact the business. The company’s overall financial health score stands at "FAIR," with particularly strong metrics in cash flow and relative value.
The report further highlighted that VF Corp’s near-term (NT) prospects are likely to overshadow the long-term fiscal year 2028 (FY28) targets that previously elevated the company’s stock value earlier in the year. With revenue declining 9% in the last twelve months and analysts forecasting further sales decline this year, the market’s focus may shift from long-term goals to immediate challenges. Get deeper insights into VF Corp’s financial outlook with InvestingPro, which offers exclusive access to over 30 key financial metrics and expert analysis.
VF Corp’s stock value had risen above $25 earlier this year, driven by optimistic long-term targets. However, the recent developments and the analyst’s revised outlook indicate that investors may recalibrate their expectations based on the latest financial results and the current economic landscape.
The price target adjustment by BNP Paribas Exane reflects a more cautious view of VF Corp’s stock, as the company navigates through the reported deceleration in one of its key brands and a miss in free cash flow, amidst broader market uncertainties.
In other recent news, VF Corp’s financial performance has been a focal point for analysts, with several firms adjusting their outlooks. The company reported mixed results in its recent earnings, with a notable decline in Vans brand sales by 20% in constant currency, while The North Face and Timberland showed growth. Stifel, BMO Capital Markets, and Needham have all reduced their price targets for VF Corp to $15, while maintaining varying ratings ranging from Buy to Market Perform. Truist Securities also adjusted its price target to $13 and maintained a Hold rating due to ongoing challenges with the Vans brand.
JPMorgan cut its price target to $15, citing a projected decrease in first-quarter revenues by 3-5% year-over-year, which is below market expectations. Despite these challenges, VF Corp expects improved gross margins in the first quarter, driven by reduced discounts and favorable foreign exchange rates. The company’s Reinvent strategy, which includes significant cost-saving initiatives, is anticipated to contribute to future financial improvements. Analysts from various firms express cautious optimism about VF Corp’s long-term potential, though they remain watchful for signs of a turnaround in the Vans brand.
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