On Friday, BMO Capital maintained its Market Perform rating on VF Corp (NYSE:VFC) with a steady price target of $14.00. The firm's analysis followed the release of VF Corp's 8K filing, which included profit and loss details for the Supreme brand. The report highlighted concerns that the previously issued company guidance, excluding Supreme's financials, might lead to overly optimistic market estimates that could require downward adjustments.
VF Corp's disclosure of Supreme's financials prompted BMO Capital to revise its own earnings forecasts for the company, anticipating that other analysts will likely do the same. The firm noted that while the focus on VF Corp's debt, Vans, and The North Face (TNF) brands remains crucial, the immediate need is to address the potential overvaluation stemming from the newly revealed information.
The analyst from BMO Capital expressed that the valuation of VF Corp could seem inflated as the market assimilates the Supreme-related details. This situation arises as VF Corp continues to navigate its ongoing business transformation. The firm's recent report contains further insights into these developments and the expected impact on the company's financial estimates.
As the market processes the provided details of Supreme's performance, the expectation is for a recalibration of consensus estimates. BMO Capital's commentary suggests a cautious approach to VF Corp's valuation in light of the additional transparency around the Supreme brand's earnings.
In other recent news, VF Corporation (NYSE:VFC) reported noteworthy developments. The company maintained its Q2 outlook despite the pending sale of the Supreme brand. The sale, which aligns with U.S. GAAP standards, is expected to result in a modest revenue decline, a slight increase in gross margin, and a minor rise in SG&A expenses. VF Corporation also announced additional cost savings of $50 million in Q1 of fiscal year 2025.
Analysts at Williams Trading reiterated a sell rating on VF Corp, expressing skepticism about the company's reliance on The North Face brand. Despite surpassing Q1 estimates, concerns were raised about VF Corp's strategic direction, particularly in light of a 12% decline in sales in the Americas. BMO Capital Markets, however, raised its price target for VF Corp from $13 to $14, maintaining a Market Perform rating.
Telsey Advisory Group also adjusted its outlook on VF Corporation, raising the price target to $19.00. The firm noted sequential improvements in the company's key brands, Vans and The North Face.
Despite the improvements, VF Corporation still faces challenges, including declines in its Americas platform and key brands. The company is actively evaluating its portfolio for potential further asset sales and expects modest revenue improvements in the second quarter.
InvestingPro Insights
As VF Corp (NYSE:VFC) faces scrutiny from BMO Capital regarding the impact of Supreme's financials on market estimates, it's essential to consider a broader set of financial metrics and analyst insights. According to InvestingPro, the company has a high Price / Book multiple of 5.0, which could raise concerns about valuation, especially when paired with a negative P/E ratio of -5.97. This suggests that investors are paying a premium for assets despite the company's recent lack of profitability.
However, not all signals are negative. VF Corp has demonstrated resilience, maintaining dividend payments for 54 consecutive years, a testament to its long-term commitment to shareholders. Moreover, the company has shown a strong return over the last three months, with a price total return of 32.34%. This may indicate a recovering sentiment among investors, potentially supported by the InvestingPro tip that analysts predict the company will be profitable this year.
For investors seeking comprehensive analysis, additional InvestingPro Tips are available, offering deeper insights into VF Corp's financial health and market position. For those interested in exploring these further, there are 7 additional tips listed on InvestingPro for VF Corp.
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