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Canaccord Genuity Downgrades VF Corporation to ‘Hold’

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Jan. 16 2017, Updated 9:07 a.m. ET

Price movement

VF Corporation (VFC) has a market cap of $21.5 billion and fell 1.3% to close at $51.83 per share on January 12, 2017. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -2.7%, -7.2%, and -2.9%, respectively, on the same day.

VFC is now trading 3.6% below its 20-day moving average, 5.4% below its 50-day moving average, and 12.0% below its 200-day moving average.

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Related ETF and peers

The iShares Edge MSCI USA Quality Factor ETF (QUAL) invests 0.28% of its holdings in VF Corporation. The YTD price movement of QUAL was 0.81% on January 12.

The market caps of VF Corporation’s competitors are as follows:

  • Gap (GPS): $9.5 billion
  • Ralph Lauren (RL): $7.1 billion
  • Columbia Sportswear (COLM): $3.9 billion

VFC’s rating

On January 12, 2017, Canaccord Genuity downgraded VF Corporation’s rating to “hold” from “buy.” It also reduced the stock’s price target to $54.0 from $64.0 per share.

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Performance of VFC in 3Q16

VFC reported 3Q16 total revenues of $3.49 billion—a fall of 1.1%, as compared to total revenues of $3.52 billion in 3Q15. Revenues for the Outdoor and Action Sports segment rose 1.7%. Revenues for the Jeanswear, Imagewear, and Sportswear segments fell 6.2%, 3.4%, and 13.0%, respectively, in 3Q16 over 3Q15.

The company’s operating margin rose 10 basis points in 3Q16 over 3Q15. However, the operating margin was impacted by the negative impact of foreign currency.

Its net income and EPS (earnings per share) rose to $498.5 million and $1.19, respectively, in 3Q16, as compared to $459.9 million and $1.07, respectively, in 3Q15.

VF Corporation’s (VFC) cash and equivalents fell 21.9%, and its inventories rose 28.6% between 4Q15 and 3Q16.

Projections

VF Corporation (VFC) made the following projections for fiscal 2016:

  • revenue growth of 2% on a currency neutral basis
  • gross margin of 48.6% including ~0.70% in headwinds from changes in foreign currency
  • operating margin of 14.3%, which includes ~0.60% from the negative impact of changes in foreign currency
  • reported EPS growth of 3% to $3.13

Now we’ll look at Vista Outdoor (VSTO).

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