On Thursday, BMO Capital Markets adjusted its outlook on Victoria's Secret (NYSE:VSCO) shares, increasing the lingerie retailer's price target to $33 from $29 while reaffirming an Outperform rating. The revision follows a series of meetings with the company's top executives, including the newly appointed CEO Hillary Super.
The BMO analyst noted the positive atmosphere of the discussions with CEO Hillary Super, CFO and Investor Relations Officer Tim Johnson, and VP of Investor Relations Kevin Wynk. The meetings highlighted the new CEO's approach to making impactful changes swiftly and thoughtfully, with a focus on data and customer-centric strategies.
According to the analyst, there is a significant opportunity for Victoria's Secret to enhance its brand storytelling, optimize promotions, and tap into the potential of its PINK brand. The company is expected to revisit its core brand values while embracing a broader definition of beauty.
The analyst expressed confidence that the ongoing growth in earnings before interest and taxes (EBIT) would contribute to higher financial projections and, in turn, a more robust valuation for the company. The increased price target to $33 reflects this optimistic outlook on Victoria's Secret's future performance.
In other recent news, Victoria's Secret reported a slight dip in sales to $1.4 billion, marking its first year-over-year quarterly operating income growth since 2021. The company has streamlined its leadership, resulting in the departure of Brand President Greg Unis and Chief Customer Officer Christine Rupp.
Barclays upgraded Victoria's Secret stock to Equal-weight and increased the price target to $25.00, reflecting a shift in the firm's perception of risk versus reward.
TD Cowen and Jefferies also increased their price targets for Victoria's Secret, following positive second-quarter earnings. TD Cowen maintained a Hold rating but increased the price target to $26, while Jefferies maintained a Buy rating and increased its price target to $30. These adjustments reflect the company's strong market control and the appointment of a new CEO, Hillary Super.
These recent developments indicate Victoria's Secret's strategic efforts to adapt to a competitive retail environment and drive growth. The company has raised its financial outlook for fiscal 2024, expecting sales to decline by around 1% from the previous year.
As Victoria's Secret navigates the competitive landscape of the intimates market, these updates suggest a more stable future for the retailer.
InvestingPro Insights
Recent data from InvestingPro aligns with BMO Capital Markets' optimistic outlook on Victoria's Secret (NYSE:VSCO). The company's stock has shown remarkable performance, with a significant 47.93% price return over the last three months and an impressive 63.36% return over the past year. This upward trend supports the analyst's positive view on the company's future prospects.
InvestingPro Tips highlight that 8 analysts have revised their earnings upwards for the upcoming period, suggesting growing confidence in the company's financial performance. This aligns with the BMO analyst's expectation of increased EBIT growth contributing to higher financial projections.
Moreover, Victoria's Secret's P/E ratio of 13.28 indicates that the stock may be reasonably valued, especially considering the potential for growth under the new CEO's leadership. The company's profitability over the last twelve months, as noted by InvestingPro, further reinforces the positive outlook.
For investors seeking more comprehensive insights, InvestingPro offers 11 additional tips for Victoria's Secret, providing a deeper understanding of the company's financial health and market position.
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