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On Thursday, Telsey Advisory Group analyst Dana Telsey adjusted the price target for Victoria’s Secret (NYSE:VSCO) shares to $40 from the previous $50 while maintaining a Market Perform rating on the stock. According to InvestingPro data, analysts’ targets for VSCO range from $28.43 to $55, with the stock currently trading at a P/E ratio of 23.9x. The revision follows the company’s announcement of new financial leadership under CEO Hilary Super, who took the helm in September last year. Telsey noted that such leadership changes are not entirely unexpected when a new CEO is appointed, as they typically form their own teams.
The departure of the former CFO, who had been with Victoria’s Secret since its IPO in 2021, introduces some uncertainty, but Telsey believes that the incoming CFO, Tim Sekella, formerly of Joann, is well-equipped for his new role at VSCO. InvestingPro analysis shows the company maintains a fair financial health score, with a current ratio of 1.17 and positive free cash flow of $158 million in the last twelve months. Despite Victoria’s Secret raising its Q4 guidance to the higher end of previous estimates, the company’s shares experienced a 6% decline in yesterday’s trading session. InvestingPro data reveals the stock has shown significant volatility, with a beta of 2.24, though it has achieved a remarkable 105.8% return over the past six months. Five analysts have recently revised their earnings estimates upward for the upcoming period. The market’s reaction suggests disappointment that Q4 results did not surpass expectations, especially in light of positive retail sector reports earlier in the month.
Telsey pointed out that as the fourth quarter results are now largely anticipated, the attention is turning to the fiscal year 2025 outlook. This will be the first annual guidance provided by CEO Hilary Super and is expected to be released alongside the full Q4 report in early March. The analyst’s decision to lower the price target to $40 is based on several factors, including a potentially more conservative outlook from the new management and a holiday season that may not have matched the performance of peers.
The new price target represents a 13.8 times multiple on Telsey’s two-year forward earnings per share (EPS) estimate of $2.90 for Victoria’s Secret, which aligns with the recent near-term average multiples for the stock. The company’s current EPS forecast for fiscal year 2025 stands at $2.38, with a gross profit margin of 44.6% in the last twelve months. Subscribers to InvestingPro can access detailed valuation metrics and 8 additional exclusive ProTips for VSCO, along with comprehensive Pro Research Reports available for over 1,400 US stocks. The upcoming full fourth quarter report will be closely watched for further insights into the company’s performance and strategic direction under its new leadership.
In other recent news, Victoria’s Secret has seen a flurry of activity from analysts. BofA Securities reduced the price target on the company’s shares to $35, maintaining an Underperform rating. This adjustment comes despite the company’s announcement of holiday results that reached the higher end of their guidance and a refined fourth-quarter sales forecast of 3-4% growth. Victoria’s Secret also adjusted its operating income projections to $260-270 million and earnings per share estimates to $2.20-2.30.
In addition, the company appointed Scott Sekella as its new Chief Financial Officer, succeeding Timothy Johnson upon his retirement in June. Barclays (LON:BARC), UBS, and TD Cowen also revised their stances on the company’s stock. Barclays upgraded Victoria’s Secret’s stock rating to Overweight and raised the price target to $53, citing a positive shift in the company’s promotional strategy. UBS upgraded the company’s stock rating from Sell to Neutral, raising the price target to $47, due to signs of fundamental improvement and a more optimistic macroeconomic view. TD Cowen raised the price target on Victoria’s Secret shares to $45, acknowledging the company’s strong quarter and raised FY24 guidance.
These are recent developments in Victoria’s Secret’s financial and operational performance, indicating a mixed outlook from different analyst firms.
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