Deutsche Bank Previews V.F. Corp Q4 Results And 2015 Outlook

Dave Weiner of Deutsche Bank on Tuesday commented in a note that V.F. Corp (NYSE: VFC) is expected to report strong underlying core trends and a strong finish to the year while facing the potential for "out-sized" foreign exchange pressures.

Weiner now expects the company will report an earnings per share of $0.99 after previously estimating an earnings per share of $1.01 on revenue of $3.327 billion. The lowered expectations is based solely on a potential impact from foreign exchange. The analyst adds that the quarter's gross margin could actually come in stronger than expected due to a strong channel mix and strong sell-troughs during the quarter.

Weiner noted that the U.S. dollar had "nominally" strengthened since the last time he heard from management on October 20. At that time, management said that it was assuming a $1.26 EUR/USD rate for the remainder of the year. The euro ultimately averaged approximately $1.25 through the end of 2014, suggesting that the fourth quarter results experienced a "small degree" of incremental P&L pressure.

However, since then, the dollar has strengthened "meaningfully" and is now trading around $1.13 to the euro, implying greater concern lies with 2015 guidance. As such, the analyst is reducing his full year fiscal 2015 earnings per share estimates by $0.24 to $3.25, including a 320 basis point in year or year revenue reductions (-$390 million) to $12.747 billion and an EBIT flow-through of $126 million.

Shares remain Buy rated with a $78 price target despite near-term risks as investors should keep shares as a core, long-term holding.