Victoria’s Secret Turnaround Faces a Wall Street Valuation Test

Victoria’s Secret & Co. lifted its full-year sales and adjusted operating income forecasts after second-quarter sales rose 10% to $1.61 billion. The results sharpened a Wall Street debate: can the retailer keep growing fast enough to justify its stock’s rally?

Comparable sales increased 9% in the quarter, and adjusted earnings reached 95 cents per share, up from 33 cents a year earlier. Both adjusted operating income and adjusted earnings per share topped the company’s prior forecasts.

The company raised its fiscal 2026 sales outlook to $7.10 billion to $7.18 billion. It now expects adjusted operating income of $560 million to $590 million, up from its previous range of $550 million to $580 million.

Optimistic analysts see room for more gains. Morgan Stanley raised its price target to $101 from $99, while Barclays set a $106 target and JPMorgan’s target stands at $110. Those firms kept favorable ratings on the shares.

Other firms see less upside. BMO began coverage with a Market Perform rating and an $80 target, citing the stock’s sharp rise and saying much of the recovery may already be reflected in its price. UBS cut its target to $87 from $95 and kept a Neutral rating.

One important caveat: the quarter’s reported operating income included more than $140 million in tariff refunds. Excluding those items, adjusted operating income was $124 million, still well above the year-earlier $55 million.

The next test is whether sales momentum can hold without one-time support. Victoria’s Secret forecast third-quarter operating income of $10 million to $20 million, and said it plans to increase marketing investment.

Investors will be watching for steady comparable-sales growth and stronger earnings from regular operations. That performance may determine whether the bullish targets prove realistic or the valuation concerns gain ground.