Shares of L Brands (LB) dropped 2% in the extended trading session on Tuesday after it announced the commencement of an underwritten secondary offering of 20 million shares of its common stock by founder Leslie H. Wexner and some other stockholders.
The company does not seek to receive any proceeds from the sale of shares in the offering.
Upon closing of the offering, L Brands will be repurchasing up to 10 million shares of its common stock from one of the selling stockholders. The repurchase price will be equal to the public offering price, less the underwriting discount. (See L Brands stock chart on TipRanks)
Also, the company seeks to fund stock buyback with cash in hand. J.P. Morgan is acting as the sole book-running manager for the offering.
After completion of the offering and buyback, the selling stockholders are expected to have disposed all of their shares of L Brands’ common stock, other than five million shares.
Last month, Evercore ISI analyst Omar Saad reiterated a Buy rating on the stock with a price target of $75 (upside potential of 1.2%). The analyst expects L Brands to report earnings per share of $0.99 for the second quarter of 2021.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 8 Buys, 6 Holds and 1 Sell. The average L Brands price target of $78.43 implies 7.2% upside potential from current levels.