Victoria's Secret & Co. Undervalued by 28%: Analyst Estimates Fair Value at $31.57

Victoria's Secret & Co. (NYSE:VSCO) has a projected fair value of $31.57 based on the 2-stage free cash flow to equity method, suggesting the stock may be 28% undervalued at $22.63. The analyst price target for VSCO is $21.60, which is 32% below the fair value estimate.

Victoria's Secret & Co. (NYSE:VSCO) has been the subject of recent financial analysis, with valuation models and analyst recommendations painting a picture of potential undervaluation. According to a recent report by Simply Wall St, the projected fair value for VSCO is $31.57, based on a 2-stage free cash flow to equity method [1]. This suggests that the current share price of $22.63 might be 28% undervalued.

The analysis employs a Discounted Cash Flow (DCF) model, which estimates the attractiveness of VSCO as an investment opportunity by discounting expected future cash flows to their present value. The 2-stage growth model assumes a higher growth rate in the initial period, followed by a stable growth rate in the second stage. The projected fair value is derived by summing the present value of the future cash flows and the terminal value, which is calculated using the Gordon Growth formula.

In contrast, the average analyst price target for VSCO is $21.60, which is 32% below the fair value estimate. This discrepancy highlights the potential for VSCO to be undervalued. The consensus rating from brokerages is a "Hold," with varied recommendations including three "sell," five "hold," and four "buy" ratings [2]. The average 1-year target price among analysts is $25.00, with price targets ranging from $15.00 to $42.00.

Several large investors have recently increased their stakes in VSCO, indicating confidence in the company's prospects. GAMMA Investing LLC raised its stake by 1,209.6% during the first quarter, while Victory Capital Management Inc. increased its holding by 54.2% [2]. These institutional inflows suggest that some investors believe VSCO is undervalued and could see future growth.

Despite the positive signals, it is essential to consider other factors that could impact VSCO's valuation. The company's earnings are forecast to decline for the next two years, which could affect its stock price. Additionally, the DCF model does not account for cyclicality or future capital requirements, so it is crucial to view this valuation as a rough estimate rather than a precise figure.

In conclusion, Victoria's Secret & Co. appears to be undervalued based on the 2-stage free cash flow to equity method and analyst price targets. However, investors should consider other factors and apply different assumptions to fully understand the company's potential performance.

References:
[1] https://finance.yahoo.com/news/victorias-secret-co-nyse-vsco-120504479.html
[2] https://www.marketbeat.com/instant-alerts/victorias-secret-co-nysevsco-receives-consensus-rating-of-hold-from-brokerages-2025-08-13/