Victoria’s Secret stock price target lowered to $26 by Jefferies on tariff concerns

Victoria's Secret (VSCO) significantly exceeded second-quarter earnings and revenue expectations, reporting EPS of $0.33 against a $0.13 forecast and revenue of $1.46 billion against $1.41 billion projected. Despite this strong operational performance, Jefferies slightly lowered its price target to $26 from $28, citing anticipated higher tariffs that offset the Q2 beat and prevented an uplift in full-year guidance. Nevertheless, Jefferies maintained its Buy rating, signaling confidence in VSCO's strategic execution and product innovation to navigate ongoing macroeconomic and tariff headwinds.

Analysis

Victoria's Secret & Co. (VSCO) demonstrated significant operational strength in its second-quarter 2025 results, decisively beating analyst expectations. The company reported earnings per share of $0.33, more than double the forecasted $0.13, on revenue of $1.46 billion, which surpassed the anticipated $1.41 billion. This performance, which exceeded the company's own top and bottom-line guidance, signals accelerating momentum driven by management's strategic execution and product innovation. However, this positive operational narrative is counterbalanced by external headwinds. Despite the strong quarter, management abstained from raising full-year guidance, citing the anticipated impact of higher tariffs which effectively offset the earnings beat. Consequently, Jefferies trimmed its price target to $26.00 from $28.00 to account for these tariff pressures. Nevertheless, the firm maintained its Buy rating, indicating confidence in the company's fundamental direction, supported by a healthy 36.29% gross margin and an attractive valuation with a P/E ratio of 9.03.

Key Decisions for Investors

• Investors should weigh the company's strong operational execution and Q2 earnings beat against the significant external risks posed by higher tariffs, which prevented a full-year guidance upgrade.
• Consider the stock's valuation, with a low P/E ratio of 9.03, as a potential value opportunity, but remain cautious as these multiples may already reflect the market's concern over macroeconomic and tariff-related headwinds.
• Monitor future commentary on profit margins and consumer traffic, as Jefferies' maintained Buy rating hinges on the belief that management's strategic initiatives can continue to drive improvements despite the challenging external environment.