Investing.com — Victoria’s Secret & Co has been upgraded to “impartial” from “promote” by UBS, reflecting rising confidence within the retailer’s turnaround below its new CEO. The funding financial institution additionally raised its value goal for the inventory to $47, up from $18, citing improved efficiency and long-term development potential.
The corporate’s North American gross sales confirmed indicators of restoration within the third quarter, rising 3% year-on-year after a 3% decline within the earlier quarter. This outpaced the broader intimate attire market, which noticed a slight drop, suggesting that Victoria’s Secret is regaining market share, UBS famous.
UBS highlighted the corporate’s strategic concentrate on modern merchandise and differentiation, projecting regular mid-single-digit gross sales development via 2025. Robust third-quarter outcomes and an optimistic vacation outlook prompted the financial institution to extend its earnings forecasts for 2024-2026 by 15-20%.
Nonetheless, the report additionally warned of challenges forward, together with potential gross sales slowdowns after the vacation season and rising competitors from rising manufacturers and low cost retailers, which may strain each gross sales and revenue margins.
UBS’s new $47 value goal relies on a price-to-earnings a number of of 15 occasions its 2026 earnings forecast of $3.05 per share, reflecting diminished danger and an bettering financial atmosphere.
Earlier, Wells Fargo downgraded the inventory to “equal weight” from “chubby,” citing restricted upside following a pointy rally this yr. Whereas Wells Fargo acknowledged the progress below new CEO Hillary Tremendous, together with product revamps and rebranding efforts, it flagged challenges in sustaining margin enhancements.
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