Diego Thomazini
Cowen lowered its rating on V.F. Corporation (NYSE:VFC) to Market Perform from Outperform.
Analyst John Kernan and team see uncertainty related to VFC management’s guidance and Vans re-acceleration that is implied by consensus estimates into FY24 as digital trends that the firm tracks for Vans still look tepid. Google search trends for Vans are noted to be weak and the Street expectation for VFC margin expansion through FY24 is seen as too aggressive.
“We continue to see rising product costs and disruption related to working capital across the entire sector, which renders sales and gross margin modeling challenging… As we update our model we now see more difficulty in achieving consensus gross margin and EBIT margin expansion beyond FY23 and into FY24 (where consensus assumes a return to FY22’s five-year peak in EBIT margin of 13.1%).”
There is also concern voiced on a large tax VFC has to pay going forward and on the capital allocation front if the level of buybacks can be maintained.
Shares of VFC fell 3.23% in early trading on Monday to $44.08.
Cowen has a price target of $52 on VFC, which is just slightly below the average Wall Street PT of $53.10.
Image and article originally from seekingalpha.com. Read the original article here.