L Brands (LB) PT Raised to $64 at Credit Suisse on a Surprise Guidance Beat
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Credit Suisse analyst Michael Binetti raised the price target on L Brands (NYSE: LB) to $64.00 (from $57.00) after the company increased 1Q EPS guidance to $0.55-0.65 from $0.35-0.45 (Street $0.43) based on QTD sales and margin performance at BBW and Victoria's Secret. Management also updated capital allocation plans, announcing $1.035B early repayment of debt (Feb 2022 calls, July 2025 secured) with cash, dividend reinstatement in 2Q (annual $0.60), and $500m share repurchase authorization.
No change to the Neutral rating, the analyst stated "while our raised 1Q sales estimates still include 1Q VS sales down 18% to 1Q19, we think 1Q will show another strong step in the brand turnaround to further improve the spinoff outlook. Further, the announcement today adds visibility to how demand for BBW’s categories (home fragrance/sanitizers) will trend through the re-open in 2021 to drive ongoing sales momentum. We continue to see limited negative catalysts in the short-term given LB has one of the better quality of sales/cost savings initiatives in the space."
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