A JP Morgan analyst believes L Brands (BBWI 2.71%) may have turned the corner on its woes, after an extremely rocky start to the year when the COVID-19 pandemic ended a chance to divest its ailing, controversial Victoria's Secret brand. Seeing a brighter future ahead for the company, analyst Matthew Boss set a December 2021 price target of $42 per share, Seeking Alpha reports, representing a roughly 30% upside.
Labeled as a "Value Idea" and added to JP Morgan's "Analyst Focus List," L Brands received the analyst thumbs-up because of several factors. The research note cites the company's projected net cost-savings of $400 million, along with increasing gross profits that reversed a seven-quarter trend of decline.
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In particular, however, Boss singled out the "commitment to establish" the Bath & Body Works brand as a "pure-play public company." He said this strategic move "in our view is too hard to ignore with a risk/reward setup on our FY22E EBITDA of $38-$51." He additionally mentioned the closure of approximately 27% of L Brands' Victoria's Secret stores in North America, or around 250 outlets, as a positive development. L Brands also recently spun off Victoria's Secret UK as a joint venture with Next PLC.
This isn't the first time Boss has made headlines this year by weighing in on L Brands' efforts to lift itself out of its long-term slump. In late July, according to Smarter Analyst, he gave the company a $32 price target, a 23.6% upside on its share price at the time. L Brands is now trading above $31 per share. At the time, Boss forecast "a sustainable double-digit stand-alone bottom-line growth profile" for Bath & Body Works.
