VF Corporation (VFC), the parent company behind beloved brands like Vans and The North Face, is experiencing a surge in its stock price on Tuesday, fueled by a strong second-quarter earnings report. The company surpassed revenue and earnings expectations, reporting $2.8 billion in revenue, exceeding the consensus estimate of $2.7 billion. Earnings per share also came in higher than anticipated at 60 cents, beating analyst predictions of 37 cents. This impressive performance can be attributed to a combination of factors, including continued momentum in Greater China and successful cost reduction strategies.
While analysts are cautiously optimistic about the company’s future, they acknowledge the current market realities. BMO Capital Markets analyst Simeon Siegel reiterated a Market Perform rating for VFC stock, with a price forecast of $14. While acknowledging the positive signs of progress and anticipating continued strength from gross margins, Siegel remains hesitant to recommend a buy due to the current share price already reflecting these factors. However, the analyst did raise FY25 adjusted EPS estimates to $0.39 from $0.35.
Goldman Sachs analyst Brooke Roach also expressed positive sentiment, maintaining a Neutral rating with a price target of $20. Roach highlights the improved profitability and sequential rebound in sales momentum witnessed in the second quarter. She attributes the exceeding of gross margin expectations to effective product costing and strong full-price sales, with inventories decreasing by 13% year-over-year. However, Roach notes that the guidance for third-quarter operating profit falls short of consensus estimates, projecting $175-200 million compared to FactSet’s expectation of $256 million. Furthermore, Roach cautions that the lack of clear visibility into sustained profitable growth for key brands limits the potential for valuation expansion until a clear path to profit improvement is established.
Despite the cautious optimism, investors are clearly responding positively to the strong Q2 results. VFC shares are trading higher by 22% to $20.78 at last check on Tuesday, demonstrating the market’s confidence in the company’s trajectory.
VF Corporation will host its investor day tomorrow, Wednesday, October 30th, where further insights into the company’s strategies and future outlook will be shared. This event is likely to provide additional clarity and fuel further market analysis and investor sentiment surrounding VFC. The company’s strong performance, coupled with the anticipated investor day insights, suggests that VFC stock could be poised for continued growth, making it a stock to watch for investors seeking exposure to the apparel and footwear industry.
