Morgan Stanley Downgrades V.F. Corporation to "Equal-Weight" as Outerwear Demand Declines (VFC)

Morgan Stanley Downgrades V.F. Corporation to “Equal-Weight” as Outerwear Demand Declines (VFC)


On Tuesday analysts at Morgan Stanley downgraded apparel and footwear manufacturer V.F. Corporation (VFC) despite its long-term growth potential.

The analysts downgraded VFC from “Overweight” to “Equal-Weight” and removed its $178 price target.

A Morgan Stanley analyst noted, “We continue to like VFC’s business and believe in a large long-term growth potential; however, are a bit more cautious in the near term and see better risk/reward in RL and PVH at current levels. We believe top-line will slow for VFC in 2013 and cause slower EPS growth due to 1) weaker jeanswear business sales due to a weaker lower/middle income consumer and 2) The North Face and Timberland sales could decelerate driven by yet another warm winter, causing retailers to reconsider their ordering practices. We do not believe there is anything wrong with the The North Face brand but believe retailers could begin ordering the category more cautiously. We also believe Timberland’s topline growth will be muted in 2013, as VFC continues to work on reinvigorating the brand for the long term. All of these factors cause us to lower our 2013 top-line revenue growth assumption to 6% and EPS to $10.73, below consensus of $11.00.”

V.F. Corp shares were flat in premarket trading on Tuesday. The stock is up +11.75% over the past year.

The Bottom Line
Shares of V.F. Corp (VFC) have a 2.33% dividend yield, based on last night’s closing stock price of $149.38. The stock has technical support in the $140-$145 price area. If the shares can firm up, we see overhead resistance around the $155-$160 price levels.

V.F. Corporation (VFC) is not recommended at this time, holding a DARS™ Rating of out 3.4 of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.