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Return of the 'traditional' bra scores an upgrade for Victoria's Secret's parent company

Martha Hunt walks the runway during the 2015 Victoria's Secret Fashion Show.
Adam Jeffery | CNBC
Martha Hunt walks the runway during the 2015 Victoria's Secret Fashion Show.

Shares of L Brands, which owns retail chains Victoria's Secret and Bath & Body Works, rose Friday after a firm upgraded the stock on the idea that millennials will buy more "traditional bras" in 2017.

FBR Capital Markets' research group, FBR & Co., upgraded L Brands to outperform from market perform, citing the fact that the company's intimate apparel segment remains a "top pick" among core consumers.

The stock closed the day up nearly 3 percent, trading around $51 per share.

"Our survey results ... show that consumers did not significantly switch out of [Victoria's Secret/PINK] intimate apparel in 2016," analyst Susan Anderson wrote in a Friday note to clients.

The firm upped its price target for L Brands to $60 from $54. FBR also increased its 2017 earnings estimates to $3.31 from $3.16 per share, while raising its 2018 EPS estimate to $3.63 from $3.36 per share.

FBR's Anderson added in the note that she expects L Brands' same-store sales to normalize once its segments aren't under as much pressure from an unnecessary product mix. "We now have increased confidence in L Brands' ability to stabilize [same-store sales] and margins in [the second half of 2017] and start to grow again," she said.

While companies such as Hanesbrands and online retailer Amazon pose threats to Victoria's Secret's share of the intimate apparel market, overall consumers are not "significantly" discontinuing shopping there, Anderson said. And a percentage of consumers are actually buying more bras and underwear from Victoria's Secret's PINK line, which caters to younger females, she added.

Even with Friday's slight gains, the stock is down more than 20 percent for the year and down more than 40 percent over the past 12 months.

Back in February, shares of L Brands fell on the issuance of weak first-quarter and 2017 guidance.

The Victoria's Secret brand, in particular, has been seen as trying to adjust its business model of late, by discontinuing swimwear and most of its apparel merchandise, and by eliminating print catalogs.

L Brands year-to-date performance 

Source: FactSet