Goldman Sachs initiated coverage of Victoria's Secret & Co. (NYSE:VSCO) with a Sell rating and $14 price target in a note Thursday, highlighting the tough macro environment and competitive pressures the company faces.
Analysts at the investment bank view VSCO as a market leader within its sector with "several idiosyncratic initiatives that should help to improve positioning long term.
They are also constructive on the company's store refresh program, loyalty initiatives, and renewed merchandise focus.
However, the risk/reward relative to other companies in Goldman Sachs's brands and apparel sector is seen as "less attractive" in the near term.
"This is driven by several macro and competitive factors we observe in the marketplace, including: (1) A choiceful and value-focused consumer, where we observe VSCO's core customer is more price sensitive in comparison to other brands in our coverage universe; and (2) Relative market share loss to fast-growing competitors," wrote Goldman Sachs.
"Against this backdrop, we are cautious on management's 2H-weighted outlook for sales and profit improvement, which embeds an assumption of stabilizing trends in the intimates market as well as the benefits of company-specific initiatives," they concluded.