Bank of America Downgrades Victoria’s Secret & Co. to Neutral

Bank of America downgraded Victoria’s Secret & Co. to Neutral from Buy, arguing that the recent advance left limited room for further earnings estimate gains.

Shares posted their steepest regular-session decline in two months after the rating change. BofA retail analyst Mary Sport said the bank’s thesis that the brand turnaround would drive upward earnings revisions had played out. She described the remaining earnings-per-share (EPS) potential as “limited EPS upside from here.”

BofA raised its fiscal 2026 EPS estimate 13% to $5.28 and its fiscal 2027 estimate 11% to $6.81. It also increased its comparable-sales growth forecast for the third quarter to 9% from 8%, and for the fourth quarter to 6% from 5%.

Sport said BofA’s fiscal 2027 earnings estimate was already 20% above consensus. The bank saw little basis for a valuation multiple above 16 times earnings. Its forecasts assume operating margin expands by more than 150 basis points to 10% in fiscal 2027; Sport said roughly 12% would be needed to justify more upside at current share levels.

Needham began coverage in October with a Buy rating and viewed the turnaround as an early-stage, multiyear effort.