Zinger Key Points
- Analyst projects VF Corporation's recovery, with FY28 EPS exceeding $2 and stock potentially reaching $40 in 2-3 years.
- VF Corporation reduces net debt from $6B to $3.3B, improving financial flexibility and operational efficiency, says analyst.
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Needham analyst Tom Nikic initiated coverage on VF Corporation VFC with a price forecast of $28.
Per the analyst, the company is recovering from a difficult period that saw its earnings per share drop by about 80%.
Nikic highlights that CEO Bracken Darrell is implementing a plan to improve efficiency and margins, rejuvenate the Vans brand, and reduce debt leverage.
The analyst views VF Corporation as an attractive turnaround story, projecting FY28 EPS to exceed $2.00 (compared to pro-forma FY24 EPS of $0.64 excluding Supreme).
The stock could reach $40 within 2-3 years, leaving room for growth, especially considering its peak of around $100 before the pandemic, the analyst highlights.
Although challenges remain, the analyst highlights that the company is a “compelling turnaround story.”
Nikic notes that VF Corporation previously had over $6 billion in net debt, but after selling Supreme for $1.5 billion and other non-core assets, along with better working-capital management and stabilizing fundamentals, net debt is now around $3.3 billion.
The company is expected to continue reducing debt, which will improve the profit and loss and provide more operational flexibility, the analyst adds.
Price Action: VFC shares are trading lower by 0.61% to $24.20 at last check Wednesday.
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