BofA Downgrades Victoria's Secret After "Brand Turnaround Has Played Out"

Résumé détaillé

BofA Downgrades Victoria's Secret After "Brand Turnaround Has Played Out" Victoria's Secret shares dropped the most in two months in the cash session after Bank of America…

Victoria's Secret shares dropped the most in two months in the cash session after Bank of America analysts downgraded the stock from Buy to Neutral, warning clients earlier this morning of "limited EPS upside from here."

"With the stock up meaningfully YTD, our thesis of upward estimate revisions driven by the brand turnaround has played out, and we are downgrading from Buy to Neutral," BofA retail analyst Mary Sport wrote in the report.

More or less, with the stock up 25% over the past month, compared with a 2% decline in the S&P 500, it seems as though Sport and her team are calling the top. She increased her 12-month price target to $112 from $95, implying about 2% upside from here.

Sport continued, "We think a 16x multiple, between apparel and high growth consumer peers, is appropriate given the double digit EPS growth opportunity. We struggle to argue for multiple expansion beyond 16x, however, as we expect limited upward revision to our estimates which are now 20% above F27 consensus."

She raised fiscal 2026 and 2027 earnings estimates by 13% and 11%, respectively, to $5.28 and $6.81 a share. She now forecasts comparable sales growth of 9% in the third quarter and 6% in the fourth, up from 8% and 5%.

She added, "In our view, VSXY would need to grow OM to ~12% in F27 to justify enough upside to buy at current levels. While recent trends are encouraging, we think this is unlikely given we are already baking in M-HSD sales growth and more than 150bp of expansion to get to 10% OM in F27."

So Victoria's Secret has gotten too expensive at these levels is the compelling case Sport has made. She also noted that higher freight costs and only half of the store remodels completed could slow margin gains from here.

Début de l'article, extrait de ZeroHedge. Pour lire la suite, ouvrez l'article chez le média.