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Investing.com -- Baird is bullish on apparel and footwear makers, upgrading Canada Goose, VF Corp and Rocky Brands to Outperform, saying tariff-related earnings pressure is now reflected in estimates and that the sector could benefit from a better macro backdrop in 2026.
The brokerage said higher import tariffs and weaker sales expectations had weighed on 2025 profit forecasts, but with those risks embedded following second-quarter earnings, valuations looked reasonable.
Back-to-school spending trends have also been stronger than feared, Baird said.
The firm highlighted potential positives for 2026 including easing tariff-related impacts, consumer stimulus from the OBBBA package, lower interest rates, and easier year-on-year comparisons.
It said these factors, along with cost-cutting efforts, could support earnings rebounds in the second half of 2026.
Baird said it was leaning more positively toward laggards with greater recovery potential. It cited Canada Goose’s brand momentum and seasonal leverage, VF’s improving financials and cost savings, and Rocky Brands’ higher beta profile as key drivers of upside.
“We have been impressed by improved fundamental performance for GOOS over the past several quarters, and we believe a continuation of recent brand momentum during seasonally more important revenue quarters could help the business to show greater margin leverage,” analyst said on Canada Goose.
The firm also raised its conviction on Nike, adding to existing Outperform-rated picks including On, Wolverine Worldwide, Boot Barn and Planet Fitness.