Despite $6 Price Target Cut, Canaccord Was Pleasantly Surprised By VF Corp's Q2 Results

Canaccord Genuity reiterated its Buy rating on VF Corp (NYSE: VFC) as it was "pleasantly surprised" with continued demand for Vans that lead to better-than-expected Q2 results.

The brokerage, however, cut the price target by $6 to $76 as the visibility into an acquisition has become more clouded. Should a deal arise, it expects VFC's multiple to rerate higher.

With respect to potential acquisitions, though the company remains active in its pursuits, it acknowledged some assets have become too pricey (and it won't overpay) while others are off the block.

Meanwhile, the company moderated its revenue guidance this year by about $225 million. That said, EPS was largely kept unchanged (excluding the Contemporary segment sale) at $3.20.

"Taking it altogether, we believe the stock has now embedded all the 'bad' news, and can begin to work as we head into 2H16. Moreover, we view VFC as a low beta way to play the winter recovery trade on expectations for a colder, more normalized winter vs. last year," analyst Camilo Lyon wrote in a note.

"With muted expectations, we see little downside and thus view the risk/reward favorably," Lyon added.

The analyst cut his 2016 EPS estimate to $3.20 from $3.24 and sales forecast to $12.452 billion from $12.941 billion.