The company plans on cutting 15% of its corporate positions
Victoria's Secret and Bath & Body Works parent L Brands Inc (NYSE:LB) is eyeing its biggest daily jump since March following an announcement that the company plans to cut 15% of its corporate workforce -- amounting to 850 employees -- in an effort to trim $400 million in costs. The firm also forecast a smaller-than-expected decline in sales for its second quarter, sparking price-target hikes from no less than 11 analysts, including J.P. Morgan Securities, which lifted its estimate to $32 from $14 and upgraded the stock to "neutral" from "overweight." LB was last seen up 21.9% at $23.82.
This puts LB well above recent pressure at the $20 mark, which has acted as a ceiling since the stock gapped below it in mid-March. The security was actually enjoying an upward trajectory prior to today, with solid support at the 10-day moving average guiding the stock higher. Now, LB boasts a year-to-date gain of over 36%.
Despite this influx of bull notes, plenty of analysts remain on the sidelines. Prior to today, Seven called LB a "strong buy," compared to 10 "holds," and one "sell." Meanwhile, the consensus 12-month price target of $19.42 sat at just a 1.6% premium to last night's close.
Options bulls will likely be cheering today's surge. In the last 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 5.22 calls were picked up for every put. This ratio rests in the 85th percentile of its annual range, too, meaning long calls are much more popular than usual.