Victoria’s Secret (VSCO – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Lorraine Hutchinson from Bank of America Securities maintained a Sell rating on the stock and has a $20.00 price target.
Lorraine Hutchinson’s rating is based on several challenges Victoria’s Secret is facing. The company needs a modest sales growth of 1-2% to effectively manage its buying, occupancy, and SG&A expenses, but achieving this growth appears difficult in the current market conditions. This situation is likely to lead to some margin degradation, as indicated by the guidance of a slight decline in the fiscal year’s gross margin, partly due to tariff impacts. Furthermore, while there is a renewed focus on product innovation and marketing efficiency, these initiatives are still in their early stages and led by new brand presidents who have yet to be hired, delaying their full impact until 2026.
Additionally, Victoria’s Secret’s capital allocation strategy prioritizes reinvestment in the business over returning capital to shareholders, which might not appeal to investors looking for immediate returns. The company’s decision to maintain flat overall marketing spend, despite reallocating it to target younger customers, also suggests limited immediate growth prospects. These factors combined lead to the conclusion that consistent sales growth and margin expansion will be challenging, justifying the Sell rating.
Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as Burlington Stores, Bath & Body Works, and Nike. According to TipRanks, Hutchinson has an average return of 5.3% and a 52.72% success rate on recommended stocks.
In another report released on March 10, Goldman Sachs also maintained a Sell rating on the stock with a $19.00 price target.