L Brands stock, and Bath & Body Works sales, soar despite COVID-19

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L Brands Inc. stock has soared 142% over the last three months despite store closures due to COVID-19. The S&P 500 index has rallied nearly 14%. The company reported a surprise second-quarter profit late Wednesday, sending shares up 3.9% on Thursday. Bath & Body Works saw a 13% sales increase to $1.97 billion during the quarter. “Bath & Body Works [is] a lone grower during COVID-19,” wrote BMO Capital analysts led by Simeon Siegel. BMO rates L Brands shares outperform with a $35 price target. In a note titled “Bath & Body Workin’ It,” Wells Fargo analysts give Bath & Body Works credit for “essentially all of L Brands’ profitability today.” Analysts there rate L Brands stock overweight with a $40 price target. “We continue to believe in management’s commitment to a stand-alone Bath & Body Works,” analysts said. L Brands announced last month that it would cut headcount by 850 workers and plans to take other measures to reduce operating losses. “[W]e are also impressed by better than expected performance at Victoria’s Secret and encouraged by initiatives that should support improving fundamentals off a low base,” wrote MKM Partners. Analysts there rate L Brands stock neutral with a fair value estimate of $22.
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