Victoria’s Secret Stock Gains as EPS Tops Consensus, Analyst Sees ‘Undervalued’ Recovery Story
2022.06.01 14:11
Victoria’s Secret (VSCO) Stock Gains as EPS Tops Consensus, Analyst Sees ‘Undervalued’ Recovery Story
By Senad Karaahmetovic
Shares of Victoria’s Secret (NYSE:VSCO) are up more than 8% in premarket trading Wednesday after the company reported better-than-expected Q1 adjusted EPS.
The lingerie and beauty retailer reported adjusted EPS of $1.11, compared to $1.97 in the year-ago period and above the analyst consensus of 84c per share. Net sales came in at $1.48 billion, down 4.5% YoY and in line with the analyst expectations.
Stores and direct comparable sales were down 8%, compared to the 25% growth reported in the same period last year. Stores only comparable sales were down 3% in the period, compared to 3% growth in the year-ago quarter.
For the second quarter, Victoria’s Secret expects EPS in the range of 95c to $1.25, while analysts were looking for $1.21 per share. Operating income is expected to be between $125 million to $155 million, compared to the estimated $153.7 million.
The company said it expects Q2 2022 sales to be up low-single digits to down low-single digits, compared to the same period last year when it reported sales of $1.61 billion.
Wells Fargo analyst Ike Boruchow cut the price target to $60.00 per share from $70.00.
“Recovery story remains undervalued, turnaround continues to unfold. While we expect some skeptics to poke holes in softened FY outlook, VSCO has showed us the brand turnaround remains on track despite navigation of the external environment,” the analyst wrote.
BofA analyst Lorraine Hutchinson reiterated a Buy rating and a $75.00 per share price target.
“We are encouraged by the underlying progress of its brand overhaul and its myriad initiatives to drive sales and margin improvement in 2H22, despite a more challenging F22 across the board for specialty retail,” Hutchinson told clients.
