Stifel maintains Buy on VF Corp stock with $35 price target

On Friday, Stifel analysts retained their Buy rating on VF Corp (NYSE:VFC) shares with a consistent price target of $35.00, despite the stock’s recent 17.5% decline over the past week to $19.43. The analysts highlighted the "Reinvent to Grow" Part 2 Investor Day, which introduced new brand leaders and outlined key strategic objectives. They noted that while VF Corp’s turnaround is ongoing, management has wisely chosen not to set new targets or timelines for achieving key brand initiatives at this stage. According to InvestingPro data, nine analysts have recently revised their earnings estimates upward for the upcoming period.

The reaffirmation of targets to achieve 10%+ operating margins even in a no-growth scenario was recognized as a positive sign, particularly given the company’s current gross profit margin of 52.6%. Stifel’s analysts expressed their continued high estimates for the company, reflecting their confidence in VF Corp’s potential, despite the absence of new targets or timelines. InvestingPro analysis shows the company has maintained dividend payments for an impressive 55 consecutive years, demonstrating long-term financial stability.

The analysts were impressed with the introduction of new brand leadership and strategies aimed at revitalizing the brand portfolio. They believe that the combination of these strategies and cost-saving initiatives could lead to margin leverage and a return to growth for VF Corp.

Stifel’s analysis suggests that the market might be undervaluing VF Corp’s shares, potentially overlooking the company’s ability to realize $2 plus in earnings power over the next 12 months. Based on these observations and the company’s strategic plans, Stifel reiterated their positive stance on VF Corp with a Buy rating and a $35 price target.

In other recent news, VF Corporation reported its third-quarter fiscal year 2024 results, surpassing analysts’ expectations with an adjusted diluted earnings per share (EPS) of $0.62, compared to the forecasted $0.33. The company’s revenue also exceeded projections, reaching $2.83 billion against the expected $2.75 billion. VF Corp announced the redemption of its 2.400% Senior Notes due in 2025, aiming to reduce debt and optimize its balance sheet. Needham analysts initiated coverage of VF Corp with a Buy rating and set a price target of $28.00, expressing optimism about the company’s recovery trajectory. Despite these positive financial results, Jefferies adjusted its price target for VF Corp to $23.00 from $24.00 while maintaining a Hold rating. VF Corp’s strategic initiatives include standardizing design processes and enhancing the customer experience, although concerns remain about the timing of sales growth for its Vans and The North Face brands. The company continues to focus on its transformation strategy, aiming for long-term value creation and a medium-term operating margin target of at least 10% by fiscal year 2028.

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