Victoria's Secret shares dropped the most in two months in the cash session after Bank of America analysts downgraded the stock from Buy to Neutral, warning clients earlier this morning of "limited EPS upside from here."
"With the stock up meaningfully YTD, our thesis of upward estimate revisions driven by the brand turnaround has played out, and we are downgrading from Buy to Neutral," BofA retail analyst Mary Sport wrote in the report.
More or less, with the stock up 25% over the past month, compared with a 2% decline in the S&P 500, it seems as though Sport and her team are calling the top. She increased her 12-month price target to $112 from $95, implying about 2% upside from here.
Sport continued, "We think a 16x multiple, between apparel and high growth consumer peers, is appropriate given the double digit EPS growth opportunity. We struggle to argue for multiple expansion beyond 16x, however, as we expect limited upward revision to our estimates which are now 20% above F27 consensus."
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