L Brands Inc’s LB results for the back half of 2020 and guidance for the first quarter of 2021 reflect that Victoria's Secret is approaching a profit inflection point and Bath & Body Works is not exhibiting any signs of topline deceleration, according to Morgan Stanley.
The L Brands Analyst: Kimberly Greenberger upgraded the rating for L Brands from Equal Weight to Overweight, while raising the price target from $45.00 $65.00
The L Brands Thesis: Bath & Body Works seems poised to generate higher profits than historical trends, L Brands seems well positioned to be more profitable in 2021 than it has been over the past five years, Greenberger said in the upgrade note.
“As such, we view HSD-LDD+ VS operating margin and low-mid-20s% BBW operating margin as achievable as early as 2021e, which would drive total 2021e EBIT to $2B+, LB's best result since 2016,” he wrote.
“This drives our medium-term EPS estimates well above prior expectations (+51% on average) and supports an upgrade,” the analyst added.
LB Price Action: Shares of L Brands had risen by 2.51% to $53.83 at the time of publication Friday.
(Photo: L Brands' Victoria's Secret store)
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.