Investors should sell shares of L Brands because the company will report earnings below Wall Street expectations in the coming year, according to Jefferies, which reiterated its underperform rating on the specialty retailer.
“Our data-driven analyses show the PINK brand is peaking, further cracking the VS monopoly. … With PINK slowing, we see more EPS risk ahead for LB (adding to pre-existing, long-term structural issues),” analyst Randal Konik wrote in a note to clients Tuesday. “We see risks at LB owing to increased competition and pricing compression as VS’s core business is changing.”
L Brands is the owner of Victoria’s Secret and Bath & Body Works. The company’s shares are down nearly 30 percent this year as it gave worse-than-expected guidance to investors on Feb. 22.