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On Friday, UBS analyst Mauricio Serna adjusted the price target for Victoria’s Secret (NYSE:VSCO) shares, bringing it down from $34.00 to $25.00 while maintaining a Neutral rating on the stock. The revision follows the company’s announcement of its first-quarter guidance and full-year outlook for 2025. According to InvestingPro data, the stock has fallen nearly 24% in the past week alone, though analysis suggests the company is currently trading below its Fair Value. The stock’s current price of $18.78 places it significantly below the analyst consensus range of $20-53.
Victoria’s Secret has reported a notable 5% year-over-year increase in comparable sales, marking its sixth consecutive quarter of sales growth. With annual revenue reaching $6.23 billion and a healthy gross profit margin of 36.67%, the company’s performance in the North America intimates market remained flat year-over-year, which is considered positive in light of the industry’s low single-digit percentage decline. This stability suggests that Victoria’s Secret’s strategic initiatives may be contributing to modest market share gains. For deeper insights into VSCO’s financial health and growth potential, InvestingPro subscribers have access to over 10 additional exclusive ProTips and comprehensive analysis.
However, the company’s first-quarter guidance for 2025 indicates a significant deceleration in sales growth, ranging from a 600 to 800 basis point decrease from the previous quarter. Furthermore, Victoria’s Secret’s full-year outlook for 2025 anticipates a decline in gross margins, despite plans to reduce promotional activities.
Serna noted that the challenges facing Victoria’s Secret, such as adverse weather conditions and the impact of tariffs, are external factors that are likely causing investors to be more cautious regarding the company’s recovery progress. The analyst believes that the positive aspects of Victoria’s Secret’s performance are being counterbalanced by the negatives, leading to an equilibrium in the potential for stock price movement in the near term.
In other recent news, Victoria’s Secret reported its fourth-quarter 2025 financial results, exceeding Wall Street expectations with an earnings per share (EPS) of $2.60, against a forecast of $2.27. The company’s revenue also surpassed predictions, coming in at $2.11 billion compared to the anticipated $2.09 billion. Despite this strong performance, TD Cowen maintained a Hold rating on Victoria’s Secret shares but lowered the price target from $37.00 to $22.50, citing a slower-than-expected start to the year and underwhelming first-quarter and full-year 2025 guidance. Analysts noted that customer traffic in January and February was weaker than anticipated, affecting the company’s sales outlook for the first quarter of 2025, which is expected to decline by 2% to 4%.
Victoria’s Secret’s full-year 2025 guidance suggests improvement as the year progresses, driven by changes in marketing and merchandise under new management. The company is focusing on enhancing its PINK brand, with plans to differentiate it and boost product categories like bras, beauty, sport, and swimwear. CEO Hillary Super highlighted strategic initiatives aimed at product innovation and operational efficiency, with the full-year revenue guidance set between $6.2 to $6.3 billion, indicating flat to slightly increased revenue. Additionally, Victoria’s Secret aims to continue expanding its international presence, which showed double-digit growth in the fourth quarter.
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