On Thursday, a financial analyst from TD Cowen adjusted the price target for VF Corp (NYSE:VFC), the apparel giant behind brands like Vans and The North Face. The new target is set at $9.00, a reduction from the previous $14.00, while the analyst maintained a Hold rating on the stock.
The revision comes amid growing concerns over the company's financial health and market performance. VF Corp is facing increased pressure in its Vans and North Face brands, which has left limited flexibility to manage its upcoming debt obligations. The company is looking at $1.7 billion in debt maturities, with a high leverage ratio indicated by 6x Net Debt to EBITDA.
The analyst anticipates a range of outcomes for VF Corp's capital structure but assumes that the company will manage to pay down $1 billion in debt by the fiscal year 2026. Given the circumstances, any refinancing efforts by VF Corp would likely be at high yield credit rates. The new price target of $9 is based on a 9x EV/EBITDA valuation.
The forecast for VF Corp's sales, margins, and Free Cash Flow remains uncertain for the fiscal years 2025 and 2026. This uncertainty in financial projections reflects the challenges the company faces in the current retail environment, as well as the potential impacts of its high debt levels on its future operations.
InvestingPro Insights
With VF Corp (NYSE:VFC) facing notable headwinds, insights from InvestingPro shed light on the company's current financial state and future prospects. According to InvestingPro Data, VF Corp has a market cap of approximately $4.79 billion and a negative P/E ratio, highlighting its recent lack of profitability. Despite this, the company boasts a strong gross profit margin of over 52% for the last twelve months as of Q3 2024. Investors may find solace in VF Corp’s high shareholder yield and the fact that it has maintained dividend payments for 54 consecutive years, even though the dividend growth has seen a sharp decline. Analysts anticipate sales growth in the current year, which could signal a potential turnaround for the company's revenue trajectory.
InvestingPro Tips suggest that while the stock price has been volatile and trading near its 52-week low, there is an expectation of net income growth this year. Additionally, the valuation implies a strong free cash flow yield, which could be a positive sign for investors looking for value opportunities. For those considering a deeper analysis, there are over 10 additional InvestingPro Tips available, which can offer a comprehensive look at VF Corp’s financials and market performance. Interested investors can unlock these insights with a special offer: Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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