On Friday, Victoria's Secret (NYSE:VSCO) saw its stock price target increased by BMO Capital from $33.00 to $46.00, while the firm maintained an Outperform rating on the stock. The adjustment follows the company's third-quarter earnings per share (EPS) which surpassed expectations, coupled with a revenue that exceeded analyst projections.
According to InvestingPro data, the company, currently valued at $3.38B, trades at a P/E ratio of 13.28x and appears overvalued based on its Fair Value analysis.
The report highlighted several positive indicators for Victoria's Secret, such as North American growth, market share gains, and an expansion in PINK apparel. These factors contributed to the company's operating income growth. Despite a slight gross margin miss due to promotions aimed at driving traffic, the company demonstrated strong selling, general, and administrative (SG&A) expense leverage.
BMO Capital noted that the momentum Victoria's Secret experienced in the third quarter continued through the Black Friday and Cyber Monday shopping period, marked by increases in traffic, conversion rates, and average basket size. The analyst expressed optimism regarding the company's top-line strength and anticipates ongoing improvements, especially within the PINK brand.
While there was a mention of below-Street gross margin guidance that warrants attention, the overall sentiment from BMO Capital remains positive. The new price target of $46.00 is based on approximately 15 times the estimated fiscal year 2025 EPS for Victoria's Secret.
InvestingPro analysis reveals that 4 analysts have revised their earnings upward for the upcoming period, with the stock showing significant momentum, gaining over 10% in the past week. Discover more insights and 12 additional ProTips for VSCO with an InvestingPro subscription, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks.
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