Wells Fargo Resumes VF Corp. (VFC) at Market Perform
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Wells Fargo resumes coverage on VF Corp. (NYSE: VFC) with a Market Perform rating and valuation range of $57-$59.
Analyst Ike Boruchow commented, "We are resuming coverage of VFC, with a new analyst, a Market Perform and a val. range of $57-59. On one hand, we believe VFC has been one of the most consistent and well-run operations in our space over the past decade-with management creating meaningful value for shareholders as "brand builders" as they worked to diversify the business across categories and geographies over that time. With that said, the business has been a bit choppier over the past 12 months ('16 organic growth likely the slowest since '09), with some questions now looming around 2 of their 3 Outdoor & Active brands (Vans and Timberland). While we believe VFC remains a "best-in-class" operator, it simply seems like there are currently more questions than answers-creating a lack of visibility into future top and bottom-line growth (our estimates fall below the Street for 2H and 2017). The key to the bull argument today rests on M&A, and as we are now more than 5 years removed from the last deal, most investors are eagerly awaiting what could be next. We view the potential for another transaction over the next 12 months as likely, but with valuations in the space high (while growth is slow), it may be difficult to find the right deal at the price that would please the investment community in the near-term (long-term value creation not withstanding). For now, we'll begin sidelined and await more clarity around the direction of VFC's key O&A brands and how that affects their go-forward earnings algorithm (is HSD top-line and 10-13% EPS growth doable next year?)."
Shares of VF Corp. closed at $58.43 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, New Coverage
Related EntitiesEarnings, Wells Fargo, Ike Boruchow
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