Victoria’s Secret rally leaves limited upside, Bank of America warns Proactive Thu, November 12, 2026 at 2:53 PM EST 2 min read BAC -0.17% VSXY -5.56% ^GSPC -0.40% VSCO 0.00% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Bank of America has downgraded Victoria's Secret & Co. (NYSE:VSCO) from Buy to Neutral, arguing that a strong share-price rally has reduced the scope for further gains.
The bank raised its earnings forecasts for the lingerie retailer but said its investment thesis, based on upward earnings revisions from a brand turnaround, had largely played out.
Victoria's Secret shares have gained 25% over the past month, outperforming a 2% decline in the S&P 500, as investors rotated into the retail group.
Bank of America considers the shares close to fair value and sees limited potential for further valuation expansion, despite continued opportunities for earnings growth.
The broker raised its earnings per share forecasts for the 2026 and 2027 financial years by 13% and 11% respectively, to US$5.28 and US$6.81.
Its revised estimates are now 20% above consensus for the 2027 financial year, leaving limited scope for further upgrades to support the share price.
Bank of America believes a valuation of 16 times forward earnings is appropriate, reflecting Victoria's Secret's double-digit earnings growth potential and positioning between traditional apparel retailers and faster-growing consumer businesses.
It also raised its price target to US$112 from US$95, reflecting higher earnings forecasts and the increased valuation multiple.
The bank remains confident in the retailer's sales trajectory, forecasting 7% revenue growth in the 2027 financial year as product innovation supports further market share gains in its intimates business.
Its forecasts include comparable sales growth of 9% in the third quarter and 6% in the fourth quarter of 2026, up from previous estimates of 8% and 5%.
Improved product ranges and stronger full-price sales are also expected to support gross margins, although freight costs and the reversal of lower tariff rates could constrain progress in 2027.
Bank of America forecasts operating margins of 9% in 2026 and approximately 10% in 2027, including 150 basis points of expansion next year.
It believes margins could eventually reach the low teens, but considers that target unlikely in 2027 because of freight pressures and the time required to complete store refurbishments.
The broker argues Victoria's Secret would need to achieve operating margins of approximately 12% in 2027 to justify further meaningful share-price upside from current levels.
