Analyst actions after 2Q results
The guidance cut by L Brands’ (LB) management along with the 2Q 2018 results on August 22 resulted in target price cuts from Wall Street. Some of the analysts that cut their target price for LB were as follows:
- Jefferies: from $23 to $20
- Credit Suisse: from $35 to $31
- Keyblanc: from $28 to $25
- Cowen and Company: from $30 to $25
- B. Riley: from $49 to $44
- J.P. Morgan: from $28 to $26
L Brands now has an average price target of $32.23, reflecting an upside of around 14%. Individual target prices on the company range from $23 to $56.
Wall Street’s view of L Brands
27 Wall Street analysts cover L Brands, and they rate the company a 2.9 on a scale of one (strong buy) to five (strong sell). L Brands’ ratings have deteriorated over the past six months. The company was rated a 2.6 in February. Weak sales and declining margins triggered analyst downgrades by Atlantic Equities (in May) and Telsey Advisory Group (in March). On the other hand, Citigroup upgraded LB citing cheap valuations. However, there were no rating changes on the company after the 2Q results.
Currently, 22% of analyst tracking L Brands recommend buying the stock, 59% suggest holding it, while the remaining 19% have set a sell rating on the company.
Analysts from Wedbush and UBS are neutral on L Brands, Citigroup and Northcoast are positive, while Loop Capital is negative on the company.
Comparing LB’s ratings with peers
Apparel players Abercrombie & Fitch (ANF) and Ralph Lauren (RL) have similar ratings to those of L Brands. While ANF is rated a 2.9, RL is ranked a 3.0. American Eagle Outfitter (AEO) has a slightly better rating of 2.5.