Nomura Securities Remains Neutral on L Brands (LB) Following 3Q
Nomura Securities reiterated a Neutral rating and $84.00 price target on L Brands (NYSE: LB) following the company's 3Q earnings report. Nomura estimates that FX pressured 3Q sales by ~1%, adding potential pressures to the North American and International segments. LB raised FY15 to $3.69–$3.79 from $3.58-$3.73 & introduced 4Q15 guidance of $1.85–1.95 vs. the Street at $1.98.
Analyst Gene Vladimirov commented, "LB put up a great Q, full stop. BBW is unstoppable (Sales +7%, EBIT up 46%), & VSD has regained its stride (sales +4%, op income “up significantly”). This impressive result coupled with mgmt strength & brand consistency continues to drive peer-leading val’n. That said, other segments remain somewhat in question: VS Stores grew sales 9%, but GM/Op Margins both contracted, as did Other “Margin” and we believe Intl sales/margins missed the St – see Intl deep dive detailing our belief that success of intl is already priced in. LB’s outperformance in a terrible envt is incontestable. That said, we remain concerned success is already priced in. On tomorrow’s 9AM conf call (866-363-4673), we await more color on margins, how high can BBW go, what’s going on at VS stores, & any further update on intl top/bottom line."
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Shares of L Brands closed at $92.23 yesterday.