VF Corporation (VFC) shares experienced a significant surge on Tuesday, climbing over 22% in early trading. The driving force behind this rally was the company’s impressive second-quarter financial results, exceeding analyst expectations on both revenue and earnings. The positive news was further amplified by multiple analysts who raised their price targets for VFC stock.
VF Corp reported revenue of $2.8 billion for the quarter, surpassing the consensus estimate of $2.7 billion. The company also reported earnings of 60 cents per share, comfortably beating analyst projections of 37 cents per share. While revenue did decline by 6% year-over-year, the company highlighted positive trends in its key brands and progress towards its cost-cutting goals.
Notably, The North Face revenue declined by 3%, while Vans revenue experienced a more significant drop of 11%. Geographically, Americas revenue dipped by 10% and international revenue fell by 2%. However, VF Corp demonstrated significant progress in inventory management, reducing inventory levels by 13% compared to the same period last year. Additionally, the company reduced net debt by $446 million, bringing its total debt down to $5.7 billion.
VF Corp CEO Bracken Darrell expressed optimism regarding the company’s performance, stating that second-quarter results were in line with expectations and that the company is on track to achieve its goal of $300 million in cost savings by the end of fiscal-year 2025. Looking ahead, VF Corp anticipates revenue between $2.7 billion and $2.75 billion for the third quarter, slightly below analyst estimates of $2.96 billion. The company also projected full-year free cash flow from continuing operations to reach $425 million.
In a show of confidence in the company’s future, VF’s board of directors announced a dividend of 9 cents per share, payable on December 18 to shareholders of record as of December 10.
The positive earnings report prompted several analysts to raise their price targets for VF Corp stock. Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating but raised the price target from $19 to $21. Baird analyst Jonathan Komp kept a Neutral rating while increasing the price target from $17 to $20. Other analysts, such as Barclays’ Adrienne Yih (Overweight rating, price target raised from $22 to $25), JPMorgan’s Matthew Boss (Neutral rating, price target raised from $16 to $17), and Citigroup’s Paul Lejuez (Buy rating, price target raised from $20 to $24) all expressed increased confidence in VF Corp’s outlook. TD Cowen analyst John Kernan also raised his price target from $16 to $19, but maintained a Hold rating.
The combination of strong earnings, progress on cost-cutting initiatives, and positive analyst sentiment has fueled a surge in VFC stock. Investors are clearly responding favorably to the company’s performance and its outlook for the remainder of the year.
