Bank of America Securities analyst Lorraine Hutchinson reiterated a Sell rating on Victoria’s Secret yesterday and set a price target of $21.00.
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Lorraine Hutchinson’s rating is based on several factors that suggest potential challenges for Victoria’s Secret in maintaining its current performance. Despite a strong second quarter driven by sales momentum, Hutchinson believes that consistent margin expansion will be difficult due to the impact of tariffs. The company’s management has raised its full-year sales guidance, reflecting the second quarter’s success, but has maintained its earnings per share guidance to account for the tariff-related costs.
Additionally, the anticipated increase in tariff headwinds from the fourth quarter onward is expected to significantly impact operating income. Management’s efforts to mitigate these tariffs, such as reducing air freight costs, may not fully offset the pressure on profitability. Hutchinson also notes that while the company plans to maintain sales momentum through new product launches and fashion events, the challenges in pricing and promotional strategies could hinder sustained growth. These factors contribute to the Sell rating, as they pose risks to the company’s future financial performance.
VSCO’s price has also changed moderately for the past six months – from $26.730 to $22.670, which is a -15.19% drop .