On Friday, TD Cowen maintained a Hold rating on Victoria's Secret (NYSE:VSCO) shares but increased the price target to $26 from $20. The adjustment follows the company's second-quarter earnings per share (EPS) landing at the higher end of its preliminary results, prompting management to raise its full-year 2024 guidance. Despite the revised annual forecast, expectations for the second half of the year are largely unaltered, a factor the analyst believes could present potential gains.
The update from TD Cowen reflects observations of progress at Victoria's Secret, with both the VS and PINK brands benefiting from changes in their merchandise offerings. The analyst notes that there are convincing factors that could contribute to a stronger performance in the latter half of 2024. However, the firm remains cautious, choosing to keep an eye on the company's execution and consumer sentiment amid an unpredictable economic environment.
Victoria's Secret's recent earnings report appears to have played a significant role in TD Cowen's reassessment. The report's alignment with the upper end of preliminary figures suggests the company's business strategies may be yielding positive results. The raised full-year guidance is an additional indication of the company's confidence moving forward.
Although the outlook for the second half of the year remains largely consistent with previous expectations, TD Cowen sees potential for upside. This perspective is based on the belief that the improvements in merchandise and other positive drivers could lead to better-than-expected outcomes for Victoria's Secret as the year progresses.
The firm's decision to maintain its Hold rating while raising the price target underscores a cautious optimism for Victoria's Secret's future performance. The emphasis on monitoring the brand's execution and consumer sentiment highlights the importance of operational efficiency and market perception in the face of ongoing economic uncertainties.
In other recent news, Victoria's Secret & Co. reported second-quarter earnings that met key financial metrics, marking its first year-over-year quarterly operating income growth since 2021. Despite a slight 1% dip in sales to $1.4 billion from the previous year, the company saw an improvement in North American sales trends across both stores and digital channels. Furthermore, the company has raised its financial outlook for fiscal 2024, with sales expected to be down approximately 1% from the previous year.
On another note, Victoria's Secret received a positive outlook from Jefferies, which increased its price target on the company's shares to $30.00 from $27.00, while maintaining a Buy rating. This adjustment follows Victoria's Secret's recent report of earnings that surpassed expectations.
The company's strong performance in the intimates market, where it holds a significant 20% share, and the appointment of new CEO Hillary Super, were key factors in Jefferies' revised price target. The lingerie retailer continues to demonstrate resilience in the face of broader market challenges, with new leadership expected to further the brand's recovery and growth. These are the latest developments for Victoria's Secret & Co.
InvestingPro Insights
Victoria's Secret (NYSE:VSCO) has been a focal point for investors following its recent earnings report and updated guidance. In light of the company's performance, InvestingPro data provides valuable insights. With a market capitalization of approximately $1.88 billion and a P/E ratio standing at 14.35, the company is trading at a high Price / Book multiple of 4.44 as of the last twelve months ending Q2 2025. Despite a slight revenue decline of 0.79% during the same period, Victoria's Secret has maintained a strong gross profit margin of 44.68%.
InvestingPro Tips suggest that the stock's price movements have been quite volatile, yet the company has delivered a strong return over the last month, with a 36.37% increase. Analysts are optimistic, having revised their earnings upwards for the upcoming period and predicting profitability for the year. These factors, combined with the company's profitability over the last twelve months, could be of interest to investors considering Victoria's Secret's potential for growth. It's worth noting, however, that the company does not pay a dividend, which may influence investment decisions depending on individual strategies.
For those looking to delve deeper into Victoria's Secret's financials and forecasts, InvestingPro offers additional insights. Currently, there are 7 more InvestingPro Tips available, which can be accessed for a comprehensive analysis of the company's outlook. Visit InvestingPro for more detailed information and expert tips to guide your investment decisions.
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