Why BTIG Is Upgrading VF Corp As Retailer Enters Fall Season

VF Corp VFC has made significant progress in addressing excess inventory issues, and there are catalysts ahead that could cause demand trends to improve heading into the fall and winter season, according to BTIG.

The VF Corp Analyst: Camilo Lyon upgraded VF Corp from Neutral to Buy and set an $88 price target. 

The VF Corp Thesis: The company has made "disciplined and targeted investments" in digital and China, Lyon said in the Tuesday upgrade note.

VF's sales and earnings are expected to accelerate through the fiscal fourth quarter and into fiscal 2022 "as store productivity ramps, demand/supply reach equilibrium, and gross margins recover," the analyst said. 

Lyon named four key factors for the rating upgrade:

1. The well-positioned brands Vans and The North Face should leverage strong category tailwinds, aided by unrelenting innovation.

2. A significant uptick in web traffic points to an improved fiscal second-quarter sales trajectory.

3. Excess inventory has progressively been worked down, setting up for a clean entry into fiscal 2022 with a stronger margin profile.

4. The optionality of a looming large-scale acquisition.

VFC Price Action: Shares of VC Corp were trading 1.61% higher at $74.44 at the time of publication Tuesday.