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On Wednesday, Goldman Sachs analysts maintained their Sell rating on Victoria’s Secret stock (NYSE: VSCO) with a price target of $15.00, as shares trade near $20.27. According to InvestingPro data, the stock has declined over 53% in the past six months, despite the company’s recent announcement highlighting stronger-than-expected sales and profitability trends for the quarter.
Analysts at Goldman Sachs expressed that, despite the positive sales figures and a relatively low P/E ratio of 8.3x, a recent security breach has tempered overall enthusiasm for the company’s performance. They cited concerns about Victoria’s Secret’s ability to navigate the current dynamic operating environment, though InvestingPro analysis indicates the company maintains healthy profit margins of 36.7%.
The firm emphasized the importance of management’s discussion on the sustainability of the current trends and the company’s strategic initiatives. Analysts believe that these discussions will be crucial in understanding the future prospects of Victoria’s Secret.
Victoria’s Secret has been working on scaling its strategic initiatives, and the upcoming discussions will likely focus on the drivers behind the recent results. The analysts’ cautious stance is influenced by the need for the company to effectively manage its challenges while executing its strategies.
Goldman Sachs’s reiterated Sell rating indicates their continued cautious outlook on Victoria’s Secret’s stock, despite the recent positive sales performance.
In other recent news, Victoria’s Secret announced preliminary first-quarter results, reporting net sales of $1.35 billion, which slightly declined by 1% year-over-year but exceeded sales expectations. The company also reported an adjusted operating income of $32 million and adjusted earnings per share of $0.09, surpassing the guidance range. Despite these positive results, the full earnings release has been delayed due to an IT security incident that temporarily disrupted corporate systems and the e-commerce website. The incident, which occurred in late May, has raised concerns about potential negative impacts on second-quarter performance, although the first quarter remained unaffected financially. Analysts from BofA Securities maintained an Underperform rating with a $20 price target, citing challenges in achieving consistent sales growth. Wells Fargo (NYSE:WFC) also reiterated an Underweight rating with a $15 target, highlighting operational concerns due to the recent e-commerce disruptions. Additionally, Victoria’s Secret has adopted a "poison pill" strategy to protect against potential hostile takeovers after BBRC International Pte Limited increased its stake in the company. This defensive measure aims to safeguard the interests of all shareholders during a period of market volatility.
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