KeyBanc upgrades L Brands to Overweight on possible value creating transaction

KeyBanc analyst Edward Yruma upgraded L Brands to Overweight from Sector Weight with a $25 price target. The shares closed Friday down 14c to $20.16. The "stark differential" in performance between Victoria's Secret and Bath & Body Works, and lack of any discernable turnaround at Victoria's Secret, makes a value creating transaction more likely, Yruma tells investors in a research note partially titled "The Worse Comps Get, the Better the Stock." Efforts to unlock value at Bath & Body are now more likely, contends the analyst. He believes a standalone Bath & Body Works business "should be a highly attractive asset." Further, the analyst still sees value in Victoria's Secret even though a potential turnaround could take time. Yruma thinks a sale of the Victoria's Secret business could approximate $4 to $6 per share in value.