J.P. Morgan Reports Limited Brands Remains Overweight With $35 Price Target

In a report published by J.P. Morgan, Limited Brands LTD remains Overweight with $35 price target.

J.P. Morgan said that Limited Brands reported strong February comps up 12% that were met with mixed reviews from investors for two reasons. “1) Victoria's Secret product margins declined for the first time since late '09, as strength in the PINK business caused a rapid increase in freight costs (as the company chased trends) as well as a negative mix shift as apparel sales grew much faster than bras/panties, and 2) the company guided March comps flat – which would be a material deceleration from Jan/Feb run rates. While management is probably erring on the conservative side with respect to March comps (back half of the month is key and Easter shift creates some uncertainty), the margin performance at VS is the real concern. That said, we feel that LTD remains one of the more insulated names in our space from a cost inflation standpoint, and with some of the strongest comp performance in retail the past 14 months and trading at a discount to the group, yesterday's selloff has created a more compelling entry point, in our view. We remain OW and are raising estimates, PT to $35.”

Limited Brands closed yesterday at $32.37.