Barclays is betting "change is afoot" at Victoria's Secret's parent company L Brands.
The investment bank on Thursday upgraded L Brands shares to overweight from underweight, and gave the retailer's stock a new price target of $30, double its previous target of $15.
L Brands shares were recently up more than 4%, trading around $20.60. The retailer, which has a market value of about $5.7 billion, has watched its stock fall a little more than 25% over the past 12 months.
"While we cannot be certain what form change will take, what we can say is the status quo is not an option," analyst Adrienne Yih wrote in the note to Barclays' clients.
The firm also pointed out that activist investors have been involved at L Brands since last March, which could prompt "structural changes" such as splitting L Brands into two separate companies, taking Victoria's Secret private or changing up the leadership, Barclays said.
L Brands, which also owns the lotion and candle maker Bath & Body Works, has struggled of late in large part because its Victoria's Secret lingerie brand has fallen out of fashion with customers. Analysts argue the chain still has way too much real estate — with much of that situated in archaic shopping malls — and constant promotions on its bras and underwear are weighing on profits.
L Brands in January said its holiday sales shrunk, leading the company to cut its earnings outlook for the fourth quarter.
That news came on the heels of L Brands promising investors in September that an "evolution" was ahead for the embattled lingerie brand. But much evidence of any changes remains to be seen.
Victoria's Secret's same-store sales across its stores and direct channels shrank by 12% during the 2019 holiday season, the company said, a much steeper drop than the previous year's decline of 4%. At Bath & Body Works, however, same-store sales climbed 9% through the holidays.
