Jesup & Lamont Initiates Coverage on Limited Brands (LTD) with a Hold; Valuation Call

October 22, 2009 9:32 AM EDT

Jesup & Lamont initiates coverage on Limited Brands (NYSE: LTD) with a Hold.

Jesup analyst says, "Our Hold rating is based on valuation coupled with uncertainty whether Victoria’s Secret can regain sales momentum and stop margin freefall...This year boils down to 4Q09: LTD’s 4Q typically contributes around 37% of annual sales and 68% of annual operating income. 4Q08 contributed 33% of LTD’s total 2008 sales and 54% of operating income...LTD delivered a poor 4Q08 so both same store sales and margin comparisons are very easy; LTD will unveil its holiday strategy at its annual investor meeting on October 27th...We believe that LTD’s biggest challenge is stabilizing Victoria’s Secret which has delivered diminishing sales and margins for the past several years...LTD’s share price has increased by 86% since the beginning of 2009, even as EPS has dropped (69%) through 2Q09; we project EPS to decline (81%) through 3Q09. LTD has potential to make some of this earnings shortfall up in 4Q09 but it is too early to call the turn, even after the unexpectedly strong 1% September comp result."

To see more analyst ratings on LTD Click Here.

Limited Brands, Inc. operates as a specialty retailer of women’s intimate and other apparel, beauty and personal care products, and accessories.

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