Cowen Raises VF Corp Price Target Ahead Of Denim Spin-Off

Outdoor and footwear brands exhibited strength in the fourth quarter, and the positive trend appear to have continued into Q1.

VF Corp VFC's stock seems undervalued ahead of the Jeanswear segment spin-off into Kontoor Brands, according to Cowen.

The Analyst

Cowen’s John Kernan maintained an Outperform rating on VF Corp. and raised the price target from $95 to $100.

The Thesis

The North Face has invested in product innovation and improved segmentation, Kernan said in a Tuesday note.

This — along with favorable weather conditions and increased spending on demand creation — has resulted in the brand’s improved performance among customers, the analyst said. 

The proprietary Cowen Consumer Tracker Survey indicates that North Face is recapturing share in the outerwear market. 

VF Corp’s FY19 guidance implies a slowdown in global revenue growth at Vans to 14 percent in Q4, down from the 27-percent generated in both Q2 and Q3, Kernan said. Management’s FY20 guidance implies a deceleration to low-double-digit growth, and these figures could prove conservative, he said. 

Citing strength at Vans and the North Face recovery, Kernan said VF Corp. could achieve 15-percent-plus EPS growth on a multiyear basis. 

Price Action

VF Corp. shares were down 0.36 percent at $86.59 at the time of publication Tuesday. 

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