Trump announces trade deal with EU following months of negotiations
On Thursday, JPMorgan analyst Matthew R. Boss revised the price target for Victoria’s Secret (NYSE:VSCO) shares, reducing it to $35 from the previous target of $43, while keeping a Neutral rating on the stock. The revision comes as the stock currently trades at $22.21, having declined over 46% year-to-date. According to InvestingPro data, the stock’s RSI suggests it’s in oversold territory, one of several key insights available in the platform’s comprehensive analysis. Boss noted the company’s recent efforts in leadership restructuring and product merchandising have started to yield positive results. Victoria’s Secret is witnessing growth in both its Victoria’s Secret and PINK brands and is on track with its cost reduction strategy, aiming for $250 million in savings by the end of fiscal year 2026. The company maintains a gross profit margin of 36.67% and trades at an attractive PEG ratio of 0.21, suggesting potential value relative to its growth prospects.
The analyst pointed out that although the company is in the early stages of a turnaround, there is a significant multi-year opportunity ahead. With consistent performance, Victoria’s Secret could enhance full-price sales, which would contribute to gross margin expansion. Additionally, the sustained growth in top-line revenue is expected to provide leverage for selling, general, and administrative expenses (SG&A), ultimately improving the operating margin rate.
The commentary from JPMorgan acknowledges the progress Victoria’s Secret has made in implementing structural cost reductions within its cost of goods sold (COGS) and SG&A. These measures are part of a broader strategy to improve financial performance over the next few years. The planned $250 million savings are a quantifiable target that the company has set to achieve by fiscal year 2026.
Victoria’s Secret’s focus on driving greater full-price selling is a key element in its strategy to support gross margin expansion. This approach, coupled with the aim to leverage SG&A on sustained top-line growth, is central to the company’s efforts to improve its operating margin rate.
In summary, while the JPMorgan analyst recognizes the potential for Victoria’s Secret’s ongoing initiatives to bear fruit, the firm maintains a neutral stance on the stock at this time. The reduced price target reflects a cautious but observant outlook on the company’s future performance as it navigates through its transformational phase. InvestingPro analysis reveals that 4 analysts have revised their earnings upward for the upcoming period, suggesting potential optimism about the company’s trajectory. For deeper insights into VSCO’s valuation and growth prospects, including 8 additional ProTips and a comprehensive Pro Research Report, investors can explore the full analysis on InvestingPro.
In other recent news, Victoria’s Secret & Co. reported fourth-quarter earnings that exceeded analyst expectations. The company achieved an adjusted earnings per share of $2.60, surpassing the consensus estimate of $2.27. Revenue for the quarter reached $2.11 billion, slightly above the projected $2.09 billion, marking a 1% increase year-over-year. Despite the positive fourth-quarter results, Victoria’s Secret provided first-quarter revenue guidance below analyst expectations, forecasting between $1.30 billion and $1.33 billion compared to the consensus of $1.39 billion. The company attributed this cautious outlook to uncertain macroeconomic conditions and unseasonable weather. For the full fiscal year 2025, Victoria’s Secret anticipates revenue between $6.2 billion and $6.3 billion, which falls short of the analyst consensus of $6.34 billion. CEO Hillary Super expressed satisfaction with the holiday sales performance and remained optimistic about the company’s future. These developments reflect recent trends and projections for the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.