Stifel Keeps L Brands (LB) at 'Buy'; Says May Comps Outpaced Expectations

Stifel affirms L Brands (NYSE: LB) at Buy with a price target of $75 following May sales results issued earlier today.

Analyst Richard Jaffe noted that flat comps for L Brands in the month compared favorably with consensus estimates calling for a 2.2 percent decline.

Jaffee commented, Management expects June comps to be up low single digits, which includes a positive impact from the shift of the Sunday and Monday of Memorial Day weekend into June. We believe management’s June comp guidance is above the Street’s expectation.

On Stifel's Buy rating, Jaffe said, While we acknowledge near-term sales pressure as the company works through the strategic changes initiated at VS, we believe fundamentally the business is solid and we are favorable regarding the company’s long-term outlook. We believe the recent sell-off is overdone and we reiterate our Buy rating. Our target price is $75 as we believe over the next twelve months the stock will trade up to approximately 19x our 2017 EPS of $3.95 as visibility for margin improvement and a return to sales growth, following the impact of the strategic changes at VS, becomes more evident. A 19x multiple is at a slight discount to the one year average of the consensus out year multiple (20.5x).

For an analyst ratings summary and ratings history on L Brands click here. For more ratings news on L Brands click here.

Shares of L Brands closed at $68.41 yesterday.

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