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On Friday, TD Cowen maintained a Hold rating on Victoria’s Secret (NYSE:VSCO) shares but lowered the price target to $22.50 from $37.00. The stock, currently trading at $19.14, has experienced a sharp 24% decline over the past week and is down 51% year-to-date. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, with analyst targets ranging from $20 to $53. Analyst Jonna Kim cited a slower than expected start to the year, with first-quarter and full-year 2025 guidance falling short of expectations. Despite this, Kim believes that the company’s valuation has become more attractive and that the lowered expectations could serve as a new baseline, provided that the broader economic environment does not worsen.
Victoria’s Secret’s fourth-quarter 2024 earnings per share matched the figures previously announced, with the company maintaining profitability at $2.05 per share over the last twelve months. InvestingPro data reveals that three analysts have recently revised their earnings estimates downward, while the company’s RSI suggests the stock is in oversold territory. The outlook for the first quarter and the full year of 2025 did not meet analyst predictions. January and February saw weaker customer traffic than the company had anticipated, especially considering the boost from the holiday season and the fashion show held in October. The sales guidance for the first quarter of 2025 anticipates a decline of 2% to 4%, although there are signs of improvement in trends towards the end of February.
The full-year 2025 guidance suggests that trends will improve as the year progresses, starting in the spring. With current revenue of $6.23 billion and a gross profit margin of 36.7%, the company operates with moderate debt levels while maintaining positive free cash flow. This optimism is based on expected changes in marketing and merchandise under the new management team. The analyst noted that these changes are particularly focused on enhancing the PINK brand, with plans to differentiate the brand more clearly and boost product categories such as bras, beauty, sport, and swimwear. For deeper insights into Victoria’s Secret’s financial health and growth potential, including 8 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
Kim’s commentary reflects a cautious optimism about the direction in which the new management is steering Victoria’s Secret and PINK. The price target has been adjusted to $22.50, which is approximately 8 times the forecasted FY2 price-to-earnings ratio. This adjustment acknowledges a significant reduction from the stock’s recent highs. The Hold rating indicates that while the brands are undergoing a transformation, the outcome of these efforts is still being closely observed.
In other recent news, Victoria’s Secret & Co. reported its fourth-quarter 2025 financial results, surpassing analysts’ expectations. The company achieved an earnings per share of $2.60, outpacing the forecasted $2.27, and reported revenue of $2.11 billion, slightly above the anticipated $2.09 billion. Despite these positive results, the company’s stock experienced a decline, which may be attributed to its flat revenue guidance for the full year. Victoria’s Secret has set a revenue target of $6.2 to $6.3 billion for the year, indicating stability with potential for slight growth.
The company is focusing on product innovation and operational efficiency to drive future performance. CEO Hillary Super emphasized strategic initiatives aimed at expanding international presence and enhancing customer engagement. Victoria’s Secret’s international business showed double-digit growth in the fourth quarter, highlighting its strong global performance. Analysts from firms such as JPMorgan and Barclays (LON:BARC) have shown interest in the company’s marketing strategies and product development, particularly in the Pink and Victoria’s Secret brands.
The company plans to continue its focus on its core strengths while exploring new opportunities in lifestyle categories such as sport and swim. Victoria’s Secret also aims to differentiate its brands through targeted marketing efforts to attract new customers and reinforce brand loyalty. As part of its growth strategy, the company is committed to enhancing its product offerings and optimizing its marketing investments to maintain market share and profitability.
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