Victoria’s Secret (VSCO – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Simeon Siegel from BMO Capital maintained a Buy rating on the stock and has a $31.00 price target.
Simeon Siegel’s rating is based on a combination of factors that highlight both challenges and potential growth for Victoria’s Secret. Despite a top-line miss, the company reported a bottom-line beat, with North American sales showing improvement for the second consecutive quarter. This indicates a positive trend in traffic and average unit retail, suggesting that the brand is gaining traction in its key market.
However, management has guided both first-quarter and full-year sales and earnings per share below expectations, reflecting some weakening trends observed in late January and early February. Despite these challenges, the company has demonstrated structural improvements, such as better promotional strategies and inventory management, which are expected to contribute to ongoing growth. Additionally, the company’s strong free cash flow and reduction in asset-based lending balance further support the Buy rating, as these factors indicate financial stability and potential for future expansion.