Investing.com -- Piper Sandler assumed coverage of V.F. Corporation with a Neutral rating and a price target of $18, citing continued challenges in reviving growth at Vans, which remains a key factor for the stock's direction.
The firm believes that while turnaround efforts are underway, meaningful growth inflection may not occur until FY27.
Vans, which contributes around 25% of VFC’s sales, has shown progress with newer franchises such as Knu Skool, Hylane, and Upland.
However, Piper Sandler’s analysis indicates these models represent only 11% of US Vans.com footwear SKUs, while core Classics franchises, including Old Skool, which accounts for over 20% of SKUs, continue to face sales declines.
The North Face and Timberland, which account for over 55% of VFC’s sales, returned to growth in F3Q25 after prolonged periods of decline.
Piper Sandler noted that product innovation and collaborations with brands like SKIMS and Louis Vuitton are contributing positively, though sustained momentum needs further validation.
While TNF is expanding into new categories like Trail and Outdoor, its core business remains tied to cold-weather products. Meanwhile, Dickies’ turnaround continues to lag after three consecutive years of sales declines.
Piper Sandler estimates potential EPS of $1.85 to $2.00, with the potential for 150-200 basis points of incremental margin for every $1 billion in additional sales.
However, most SG&A leverage benefits are expected toward FY28. Achieving a 10% EBIT margin without revenue growth, as outlined by management, would imply $1.85 in EPS. The firm’s SOTP analysis suggests shares are fairly valued with 6% downside potential.
Despite shares being down over 20% year-to-date, VFC is still trading at 14.6x FY26 EPS estimates, above the historical 11-12x range observed between FY22-FY24.
"Our SOTP analysis also indicates shares are fairly valued, suggesting 6% downside vs. current levels," Piper Sandler noted.
