L Brands Analysts Shrug Off Drop, See Room for Stock to Run
(Bloomberg) -- L Brands Inc.’s stock rally paused Tuesday after an 85% run-up this year but the shares still have room for further gains, according to at least some analysts.
The company said Tuesday that it plans to spin off its Victoria’s Secret chain to shareholders, and reported preliminary results for its fiscal first quarter that beat estimates. Shares fell 1.8% amid a broader market selloff even as some analysts boosted their price targets on the stock, widening the gap between the current share price and the average target to about 7.3%.
In a note, BMO Capital Markets analyst Simeon Siegel said the stock has upside as the planned spinoff unlocks value for both Victoria’s Secret and Bath & Body Works.
Wells Fargo analyst Ike Boruchow said outperformance at both brands “reflects clear and present momentum.” Overall, analysts are split on L Brands’ long-run potential as 10 rate the company a buy, 12 a hold and one a sell.
L Brands is the second-best performing stock in the S&P 500 Index this year, after losing the first position to steelmaker Nucor Corp. on May 6. The company’s strength in its soap and lotion business, profit improvements at Victoria’s Secret and a clear timetable to separate the beleaguered lingerie chain have driven the stock to its highest levels since 2016. Its preliminary first-quarter results beat the company’s own forecast, which it had already raised twice in March.
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