Victoria’s Secret & Co. (NYSE: VSCO) received a major vote of confidence from UBS, which upgraded the lingerie retailer’s stock from neutral to buy.
The investment bank also raised its 12-month price target to $46 per share from $25, implying a potential upside of around 33% from the company’s most recent closing price.
Victoria’s Secret stock surged 2.6% in premarket trading after the upgrade.
UBS analyst Mauricio Serna cited increased confidence in Victoria’s Secret’s management team and its ability to reposition both the Victoria’s Secret and Pink brands effectively.
After several years of declining comparable sales, Serna expects the company’s strategic efforts to drive a return to sustainable growth and renewed investor optimism.
“This should lead to sustained comp sales growth post several years of declines, driving market sentiment higher,” Serna wrote.
“We believe VSCO’s product pipeline and marketing initiatives should sustain the momentum into Holiday, resulting in another MSD% comp for 4Q25.”
Analyst sees room for earnings recovery
According to Serna, Wall Street’s current consensus forecasts do not fully capture Victoria’s Secret’s operating leverage potential.
He expects the company’s upcoming third-quarter results to be solid and sees “meaningful upside” to current earnings estimates.
While acknowledging the near-term pressure from tariff headwinds, Serna argued that fiscal year 2025 will likely represent the trough in EBIT margin and earnings.
Beyond that, he projects sequential improvement, with earnings per share (EPS) transitioning from declines to growth through 2026.
“We believe this sequential improvement will cause the market to gain conviction on VSCO’s turnaround,” Serna added.
UBS anticipates Victoria’s Secret’s sales could grow 3% year-over-year over the next two years, supported by stronger performance across North American stores and continued momentum in international markets.
The analyst also expects improved profitability as the company reduces promotional activity and focuses more heavily on full-price sales, which could lead to stronger gross margin returns.
Brand repositioning and market sentiment
The UBS upgrade follows the company’s 2025 fashion show on October 15, which drew attention from analysts and investors alike.
Goldman Sachs described the event as “successful,” noting that it served as a catalyst for modest improvement in brand engagement.
The fashion show marked a symbolic step in Victoria’s Secret’s ongoing efforts to modernize its image and reconnect with consumers after a challenging few years marked by falling sales and shifting consumer preferences.
Despite the positive outlook from UBS, Victoria’s Secret shares are down 17% year-to-date, reflecting broader investor caution amid a competitive retail environment and macroeconomic headwinds.
However, with UBS raising its price target to $46, the firm’s new outlook suggests optimism that the company’s transformation efforts are beginning to take hold.
UBS’s bullish stance signals a belief that Victoria’s Secret is at a turning point, with stronger management execution, improved product offerings, and targeted marketing initiatives potentially paving the way for a sustained recovery in both earnings and market sentiment.
If these expectations hold true, the retailer’s turnaround story could gain further traction heading into the holiday season and into 2026, setting the stage for renewed investor interest after years of underperformance.
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