We have maintained our long-term Neutral recommendation on
L Brands, Inc
) with a target price of $55.00.
Why the Reiteration?
L Brands commands a market leading position in the lingerie,
personal care and beauty segments. We believe that the company's
innovation in merchandise and exclusive assortments remain
popular among consumers and sets it apart from peers. This is
well evident from the recently concluded quarter, where both top
and bottom line numbers were impressive and handily surpassed the
Zacks Consensus Estimate. Moreover, the company witnessed a
healthy rise in May sales wherein comps increased 3% for the
We believe that the consumers, who cut back on their
discretionary spending during the recession, are now gradually
opening their wallets and Limited Brands with its operational
efficiencies, new and innovative assortments and upcoming bra and
fragrance launches remains well positioned to capitalize on the
However, this Zacks Rank #3 (Hold) stock stated that margins
are likely to remain muted in the near-term. Moreover, the third
quarter remains challenged as the company typically generates
lowest volumes during that time. Going forward, management
expects gross margins to be down year over year both for the
second quarter and fiscal 2013. Alongside, stiff competition and
lingering economic woes remain short-term deterrents for the
Other Stocks to Consider
Until any further upward revision in the Zacks Rank of Limited
Brands, the other stock worth considering in the non-food retail,
wholesale sector include
Big 5 Sporting Goods Corp
), which holds a Zacks Rank #1 (Strong Buy) and is expected to
continue with its upbeat performance.
The Gap, Inc
), carrying a Zacks Rank #2 (Buy) are also worth considering.
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CABELAS INC (CAB): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
L BRANDS INC (LTD): Free Stock Analysis
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