After being wrong with its bullish call for L Brands all year, Cowen gave up Wednesday and lowered its rating to market perform from outperform. The firm cited increased competition in the intimate apparel industry.
"We hope Victoria's Secret can ... stimulate demand to drive store traffic, and gain share in lingerie & sport; however, we see risk to comp and margin if L Brands does not achieve elevated pricing," analyst Oliver Chen wrote in a note to clients.
"Victoria's Secret needs to rebalance the assortment in their core lingerie offering after the shift toward Bralettes & Sport last year pressured Average Unit Retail," he added.
L Brands is the owner of Victoria's Secret and Bath & Body Works. Its stock has underperformed the market this year with its shares down 40 percent through Tuesday, compared with the S&P 500's 12 percent return.
Chen said Victoria's Secret is losing market share to competitors like the American Eagle-owned Aerie brand, which grew its lingerie and bra sales by 26 percent in the second quarter. L Brands has reported sales declines in the last two quarters. Chen also mentioned the increasing sports bra competition from Nike and Under Armour.
The analyst lowered his price target for L Brands to $39 from $40, roughly even with Tuesday's $39.23 closing price.
"We believe LB is in the midst of transformational change, and we worry the stock and valuation could be sideways if risk to store traffic and bra pricing persists," he wrote.
L Brands did not immediately respond to a request for comment for this story.
— CNBC's Michael Bloom contributed to this story.