On Thursday, Jefferies adjusted its outlook on Victoria's Secret (NYSE:VSCO), reducing the lingerie retailer's price target to $27 from $35, while still endorsing the stock with a buy rating. The firm's stance comes after Victoria's Secret delivered fourth-quarter earnings that aligned with their forecasts. Although revenue was slightly below expectations, the company experienced an earnings per share (EPS) triumph, reporting $2.58 against a consensus of $2.46.
The company's financial performance benefited from a better-than-expected gross margin and positive results from below-the-line items. Despite these gains, Victoria's Secret anticipates challenges ahead, citing pressures in the North American intimates market. Consequently, the company has provided cautious guidance for both the first quarter and the full fiscal year of 2025.
In response to the company's outlook and recent performance, Jefferies acknowledged the ongoing potential for Victoria's Secret to recapture margins. However, the firm has revised its estimates and price target to account for the broader macroeconomic demand headwinds facing the retailer. This recalibration reflects the firm's analysis of external factors likely to impact Victoria's Secret's business.
Victoria's Secret's latest financial results and forward-looking statements indicate a strategic awareness of the current market dynamics. The company's management is navigating through a retail landscape that is being shaped by various economic pressures.
Jefferies' updated assessment and continued buy rating suggest confidence in Victoria's Secret's ability to manage these challenges while acknowledging the need to adjust expectations in light of the prevailing economic environment.
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