Don’t Chase Victoria’s Secret Stock Here

• Victoria’s Secret (VSXY) has surged 355% over the past year, driven by strong technical momentum.
• Shares are trading at a new all-time high.
• Valuation appears stretched at a 30.52x trailing price-earnings ratio.
• With high short interest and volatility, VSXY is a hold for current owners but not an attractive long-term entry.

Today’s Featured Stock

Valued at $7 billion, Victoria’s Secret (VSXY) is an intimate specialty retailer offering an assortment of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, and athleisure, as well as prestige fragrances and body care.

What I’m Watching

I found today’s Chart of the Day by using Barchart’s powerful screening functions to sort for stocks with the highest technical buy signals; superior current momentum in both strength and direction, Weighted Alpha above 50+ and a 60-Month Beta over 1.5. I then used Barchart’s Flipcharts feature to review the charts for consistent price appreciation. 

Barchart’s Technical Indicators for Victoria's Secret

Editor’s Note: The technical indicators below are updated live during the session every 20 minutes and can therefore change each day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com website when you read this report. These technical indicators form the Barchart Opinion on a particular stock.

Victoria's Secret scored a 3-year high of $91.97 on July 30.

• Victoria's Secret has a Weighted Alpha of 295.78.
• VSXY has a 100% “Buy” opinion from Barchart.
• The stock has gained 355.69% over the past 52 weeks.
• Victoria's Secret has its Trend Seeker “Buy” signal intact.
• The stock recently traded at $89.10 with a 50-day moving average of $76.85.
• VSXY has made 9 new highs and gained 6.55% over the past month.
• 60-month beta of 2.07.
• Relative Strength Index (RSI) is at 63.21.
• There’s a technical support level around $86.58.

Don’t Forget the Fundamentals

• $7 billion market capitalization.
• 30.52x trailing price-earnings ratio.
• Revenue is predicted to grow 8.66% this year and another 4.38% next year.
• Earnings are estimated to increase 54.07% this year and an additional 18.17% next year

Analyst and Investor Sentiment on Victoria’s Secret

• The Wall Street analysts followed by Barchart give the stock 7 “Strong Buy” and 5 “Hold” opinions with price targets between $73 and $110.
• Value Line rates the stock “Above Average” with price targets from $29 to $132.
• CFRA’s MarketScope rates the stock a “Strong Buy.”
• Morningstar thinks the stock is 14% overvalued with a fair value of $77.90.
• 32,670 investors are following the stock on Seeking Alpha, which rates it a “Strong Buy” and has a problem with its valuation
• Short interest is 13.82% of the float with 7.30 days to cover the float.

The Bottom Line on Victoria’s Secret

VSXY has predicted increases in both revenue and earnings for the next two years. The valuation looks a little stretched, and the short interest is a little high at 13.82% of the float. If you have it, hold it, but shares are not at a good entry point for the long haul.

Additional disclosure: The Barchart Chart of the Day highlights stocks that are experiencing exceptional current price appreciation. They are not intended to be buy recommendations as these stocks are extremely volatile and speculative. Should you decide to add one of these stocks to your investment portfolio it is highly suggested you follow a predetermined diversification and moving stop loss discipline that is consistent with your personal investment risk tolerance.