On Tuesday, UBS has adjusted its outlook on VF Corp (NYSE:VFC), a leading apparel and footwear company, by reducing its price target to $12.00 from the previous $14.00, while maintaining a Neutral rating on the company's shares.
The revision reflects a cautious stance on the potential recovery of the company's stock price, which has been under scrutiny due to its sales and earnings per share (EPS) growth trends.
The firm commented that the stock price is expected to stabilize once there is a shift in the sales and EPS growth trends, specifically from a phase of deterioration to a phase of lesser decline. However, UBS anticipates that this positive change in trajectory may not occur in the near future. As a result, the expectation is that the stock price will not begin to recover until this inflection point is reached.
UBS also addressed the argument that VF Corp's valuation may appear attractive, noting that valuation alone is seldom a driving force for stock prices within the Softlines sector. Instead, the market tends to react more significantly to changes in the rate of growth of companies. This perspective suggests that a tangible improvement in VF Corp's business trends is necessary before there could be a reassessment of the current Neutral position.
In summary, UBS has signaled that it is looking for a clearer indication of VF Corp's business momentum shifting towards a less negative direction before considering a change in its rating. The current price target adjustment reflects this cautious approach towards the company's near-term prospects.
InvestingPro Insights
Following UBS's recent price target adjustment for VF Corp (NYSE:VFC), a closer look at real-time data from InvestingPro reveals additional insights into the company's financial health and stock performance. VF Corp's market capitalization stands at approximately $4.8 billion, indicating its significant presence in the apparel and footwear industry. Despite challenges, VF Corp's gross profit margin remains strong at 52.05% for the last twelve months as of Q4 2023, showcasing the company's ability to maintain profitability in its operations.
InvestingPro Tips highlight that VF Corp has a history of high shareholder yield and has consistently maintained dividend payments for 54 consecutive years, which may appeal to income-focused investors. Furthermore, while the company has not been profitable over the last twelve months, analysts predict that VF Corp will return to profitability this year. This aligns with UBS's outlook for a potential recovery, contingent on improved business trends.
For investors seeking a deeper analysis, InvestingPro offers additional insights, including 10 more InvestingPro Tips that can be accessed for VF Corp at Investing.com. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of data and expert perspectives to inform your investment decisions.
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