In a report released yesterday, Lorraine Hutchinson from Bank of America Securities reiterated a Sell rating on VF (VFC – Research Report), with a price target of $12.00.
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Lorraine Hutchinson’s rating is based on the challenges VF Corporation is facing with its Vans brand, which has experienced a significant decline in revenue. The brand’s efforts to elevate its market position have led to reduced storefronts and inventory in China, contributing to a 20% revenue drop in the fourth quarter. This decline is expected to continue into the next quarters, delaying the brand’s recovery.
Additionally, the impact of tariffs is anticipated to increase costs significantly, although management plans to mitigate this through various strategies. Despite some positive signs like improved operating margins and potential free cash flow improvements, the overall outlook remains cautious due to the slow turnaround of Vans and the challenging macroeconomic environment. Consequently, Hutchinson has lowered the price objective and earnings estimates, reflecting the heightened risks associated with VF’s brand recovery efforts.
VFC’s price has also changed moderately for the past six months – from $18.790 to $12.150, which is a -35.34% drop .