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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Why Victoria's Secret (VSCO) Stock Is Falling Today

VSCO Cover Image

What Happened?

Shares of intimatewear and beauty retailer Victoria’s Secret (NYSE: VSCO) fell 4.3% in the morning session after Morgan Stanley reiterated a cautious "Hold" rating on the stock, flagging concerns about future profitability and limited earnings visibility. 

The analyst, Alexandra Straton, acknowledged that Victoria's Secret's second-quarter results topped expectations, suggesting its turnaround efforts are gaining traction. However, the firm remains cautious, pointing to significant headwinds. The report highlighted that earnings before interest and taxes (EBIT) margins are still below historical averages and that management's third-quarter guidance was softer than expected. The analyst cited challenges from tariff pressures, increased marketing expenses, and rising labor costs. This cautious view appeared to overshadow more optimistic news from the previous day, when Jefferies raised its price target on the stock due to strong momentum.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Victoria's Secret? Access our full analysis report here, it’s free.

What Is The Market Telling Us

Victoria's Secret’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 1.9% on the news that Jefferies raised its price target on the stock to $30 from $26, citing strong momentum. The investment bank's move reflects growing confidence in the company. This follows a similar price target increase from UBS in late August, which raised its target to $25 after Victoria's Secret reported second-quarter results that surpassed analyst expectations. According to UBS, the company's quarterly report showed its turnaround is gaining traction. Adding to the positive developments, the specialty retailer also expanded its travel retail footprint, opening a new store at London Luton Airport in partnership with Avolta.

Victoria's Secret is down 35.4% since the beginning of the year, and at $26.11 per share, it is trading 46.4% below its 52-week high of $48.71 from December 2024. Investors who bought $1,000 worth of Victoria's Secret’s shares at the IPO in July 2021 would now be looking at an investment worth $614.35.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

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