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Investing.com -- Victoria’s Secret has been upgraded to Overweight from Equal Weight by Barclays (LON:BARC), with analysts noting key positive developments that signal a strong turnaround for the brand.
Barclays raised its price target to $53 from $51 per share, highlighting confidence in the company’s ability to achieve meaningful top-line acceleration and margin expansion.
Barclays outlined three critical catalysts driving the upgrade: a positive promotional inflection this quarter, sustainable positive comparable sales growth beginning in Q3 FY2024, and an improved sales-to-inventory spread.
Analysts believe these factors position Victoria’s Secret for continued growth. "With VSCO's inflection to positive comps in FY3Q24, our 4QTD24 promo checks indicate a sustained pull-back in discounting across both of its brands," the note stated. This shift toward full-price selling is expected to fuel multi-quarter gross margin expansion.
Barclays also emphasized the leadership of newly appointed CEO Hillary Super, who took the helm in September 2024. Super, a retail veteran with extensive experience, is credited with spearheading a strategic renewal of the Victoria’s Secret and PINK brands. “We believe Hillary Super is the right CEO to re-accelerate growth… and regain share in the category,” Barclays said.
Victoria’s Secret is also said to have made strides in returning to its brand roots and refreshing its product offerings, which are resonating with consumers.
Despite near-term pressures from promotions and transportation costs, Barclays sees a strong pipeline of new products and a cleaner inventory position setting the stage for FY2025 growth.
Barclays raised its FY2025 EPS estimate to $2.84 (up from $2.43) and expects continued upside as the company executes its turnaround strategy. Analysts concluded,
“We now have greater confidence VSCO is entering a phase of sales growth and margin expansion above consensus expectations.”