Victoria’s secret (NYSE:VSCO) is a large, well-known retailer that sells women’s clothing and lingerie. He has been working on recovering the business for several years. And it seems investors think the turnaround came after the company reported first-quarter 2026 earnings. But Wall Street analysts at Jefferies and UBS believe the stock has moved too far, too fast. Maybe they are right.
Victoria’s Secret had a good quarter
To be fair, Victoria’s Secret had a very strong first quarter in 2026, despite consumers becoming increasingly budget-conscious. The retailer’s sales increased 15%, exceeding management’s forecasts. Same-store sales growth was also impressive, at 13%. Earnings per share were $0.56, compared to a loss of $0.02 per share in the first quarter of 2025.
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The company also raised its full-year guidance. This is not something companies typically do after a single quarter, unless they are very confident about the future. Therefore, it is not surprising that investors react positively. However, the magnitude of the positive reaction was a bit shocking, with the stock gap increasing by more than 40%.
VSXY Data by YCharts
Investors May Be Too Enthusiastic About Victoria’s Secret
While Victoria’s Secret had a very strong first quarter, the stock’s surprisingly large rally on the news has analysts at Jefferies and UBS worried. Basically, the big story is that these analysts fear that investors have already priced in all the good news. Therefore, there are few growth opportunities ahead. This is not an unreasonable assessment of the situation.
With such a big price move, it’s almost as if Wall Street is saying that Victoria’s Secret became a new company overnight. The rest of the year may be stronger than the company expected just three months ago when it first provided its 2026 guidance, but some perspective is needed.
For example, sales in 2026 are now projected to fall between $7.03 billion and $7.13 billion, down from a range of $6.85 billion to $6.95 billion. That’s less than a 3% change on both the low and high end. Adjusted operating income is now expected to fall to between $550 million and $580 million, down from a range of $430 million to $460 million. It’s a more impressive turnaround: Net income rose nearly 28% at the low end of the range and 26% at the high end.