JPMorgan Turns Bullish On L Brands

JPMorgan analyst Matthew Boss raised L Brands’ (LB) stock rating to Buy from Hold on Wednesday, after the company provided a separation update related to Victoria’s Secret and Bath & Body Works. Boss also lifted his price target to $32 (23.6% upside potential) from $14.

Shares are down 2.4% in Thursday’s pre-market trading after jumping 35.4% to $6.76 on Wednesday.

On July 28, L Brands divided Victoria’s Secret and Bath & Body Works into two independent companies. In addition, L Brands said it expects Bath & Body Works 2Q sales to rise by a preliminary 10% and Victoria’s Secret sales to fall by 40%.

Boss believes that the Bath & Body Works division represents the “best current [comparison] story” in brick-and-mortar retail. He further added in a commentary cited by Bloomberg that Bath & Body Works would likely have “a sustainable double-digit stand-alone bottom-line growth profile.”

On July 29, KeyBanc analyst Edward Yruma raised his price target to $28 (8.2% upside potential) from $25, saying that “Bath & Body Works remains one of the best stories in consumer/ retail”. He added that “unlike at the beginning of the pandemic (when soaps and sanitizers outperformed), Bath & Body Works’ strong sales results are being driven across its product suite.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 8 Buys, 7 Holds, and 2 Sells. The average price target of $22.13 implies downside potential of 14.5%. (See LB stock analysis on TipRanks).

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