VF Corporation's Cost Management Should Enable It To Hit Full Year EPS Plans, According To Buckingham

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In a report issued Monday, Buckingham Research analysts David J. Glick and Jarrod Feinstein reiterated a Buy rating and $70 price target on shares of

VF Corp VFC. This means that, on top of the 2.5 percent dividend, the stock offers a 15 percent upside potential.

The company has been experiencing some top-line pressure, and management expects this to continue toward the end of the year due to both macro and brand-specific issues. However, analysts at Buckingham expect it to make full year EPS plans “as they manage expenses tightly through a challenging retail environment domestically.” Moreover, international trends remain stout and should consequently continue to drive the company’s margins and consolidated tax rate.

Bottom line, given the management team’s “strong track record on brand and coalition portfolio management,” the experts believe “investors should be patient and take advantage of any weakness to get in front of the next big acquisition.” They think that, over time, VF Corp could witness “some multiple expansion and accelerated growth as the company reshapes its portfolio, focusing on its higher margin, higher return growth businesses.”

Buckingham still expects a large deal ($2 to $5 billion EV) over the next couple years, “which could be accretive to organic growth (conservatively be 25-75c accretive within 2 years).”

Citing a compelling risk/reward profile that carries only 14 percent downside to shares and as much ad 36 percent upside potential, the analysts maintain a Buy rating on shares of VF Corp.

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Posted In: Analyst ColorLong IdeasReiterationAnalyst RatingsTrading IdeasBuckinghamBuckingham Research
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