JPMorgan moved V.F. Corporation to an Underweight rating and reduced its price target to $18 from $19, citing a weaker revenue trajectory and a longer timeline for margins to recover at key brands, most notably Vans.
The firm expects Vans revenue to decline 4.5% in fiscal 2027, a steeper drop than the Street's projection of only a slight decline. JPMorgan characterized the recovery at Vans as non-linear, expecting negative mid-single-digit declines to continue into the first half of fiscal 2027 before moderating later in the year.
JPMorgan noted that management has pointed to early signs of improved product traction and marketing progress under Brand President Sun Choe. However, the bank observed that much of the current footwear and apparel assortment was not developed fully under her oversight, given standard product lead times of roughly 18 months and her July 2024 start date.
On the profit front, the brokerage trimmed its fiscal 2027 earnings-per-share forecast to $0.99 from the Street's $1.03, and reduced its fiscal 2028 EPS estimate to $1.26 from $1.29. It now models average revenue growth of 2.5% over the next two fiscal years, below the consensus view of 3.1%.
JPMorgan also scaled back its operating margin outlook, projecting V.F.'s operating margin will reach 8.4% by fiscal 2028. That is short of the company's 10% operating margin target articulated at its October 2024 investor day.
The lowered price target was derived from a valuation of about 8 times JPMorgan's 2027 EBITDA forecast of roughly $1.1 billion. The bank noted this multiple sits below V.F.'s pre-pandemic three-year average multiple of 9 times, and that the company's forward growth and margin profile remains about 200 basis points below pre-pandemic levels.
Beyond Vans, JPMorgan highlighted moderating growth at Timberland and softer trends for The North Face in Europe and Asia-Pacific. The bank warned these pressures could further postpone margin expansion as V.F. reinvests in stores and marketing initiatives intended to restore traffic.
Sectors impacted: Apparel and footwear retail, consumer discretionary, and retail marketing and store operations.