On Monday, JPMorgan (NYSE:JPM) updated its stance on Victoria's Secret (NYSE:VSCO), upgrading the lingerie retailer from Underweight to Neutral and significantly lifting the price target to $45.00, up from the previous $29.00. The stock, currently trading at $48.02, has shown remarkable momentum with a 138% surge over the past six months.
According to InvestingPro data, the stock is trading near its 52-week high of $48.70, reflecting strong investor confidence amid recent executive changes and signs of business improvement.
Victoria's Secret has initiated a series of C-Suite and merchandising changes that are starting to yield positive results. The company has seen topline growth in both its Victoria's Secret and PINK brands. Additionally, it has made strides in reducing structural costs within its cost of goods sold (COGS) and selling, general, and administrative expenses (SG&A), planning $250 million in savings by the fiscal year 2026.
The analyst from JPMorgan acknowledged the early stages of the company's turnaround but noted the potential for a multi-year opportunity. With continued efforts, Victoria's Secret could enhance full-price sales, which would contribute to gross margin expansion. This, combined with sustained topline growth, could lead to better leverage of SG&A expenses and overall improvement in operating margin rates.
The upgrade to a Neutral rating reflects a more balanced view of the company's prospects, considering the progress made and the opportunities that lie ahead. Victoria's Secret's efforts toward cost reduction and improved pricing strategy are seen as key drivers for the business going forward.
JPMorgan's revised price target suggests a more optimistic outlook for Victoria's Secret's financial performance and stock valuation in the near future. The company's ongoing changes and strategic initiatives are anticipated to positively influence its market position and financial health.
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