VSCO Stock Forecast & Price Target

Victoria's Secret & Co has demonstrated a positive trend by growing its U.S. market share in the intimates sector by low-single digits during a period when the overall market contracted. Revenue increased by mid-single digits for the company overall, with the PINK brand achieving low double-digit growth, indicating strong performance across its product lines. Additionally, improved gross margins were reported due to reduced promotions and a focus on regular price selling, contributing further to the company's favorable financial outlook.

Victoria's Secret & Co anticipates a low double-digit operating margin in the future, a significant increase from the current 5.6%, but this projection is met with skepticism due to various systemic risks such as consumer spending volatility, rising interest rates, and declining consumer confidence. Furthermore, the company may experience gross margin pressure at 170 basis points, resulting in a target of 38%, which is aligned with consensus estimates yet highlights ongoing profitability challenges. The expectation of an operating margin decrease of 90 basis points year-over-year to 13.3% reflects a concerning trend in financial performance that contributes to a negative outlook on the stock.