Victoria’s Secret & Co. (NYSE:VSCO) reported first-quarter results that comfortably exceeded market expectations and raised its full-year financial guidance, sending shares sharply higher in premarket trading.

UBS cited valuation as the rationale for the downgrade, arguing that the key drivers of its bullish investment thesis have largely materialized.

The lingerie giant’s “promo detox” meant more full-price selling in Q1, and both the namesake and Pink brands took market share.

Strong revenue performance drove very strong profit growth. At the adj. gross profit level, VSXY saw growth of 23%, with margins up 240 bps y/y. Operating leverage was apparent as adj. EBIT margin went up by 280 bps y/y, leading to adj. net income increasing ~7x, from $7.2 million in Q1 2025 to $50.5 million this year.

Net Sales Increased 15% to $1.560 Billion, Exceeding Guidance Operating Income Increased to $76 Million; Adjusted Operating Income of $80 Million

Wall Street analysts expect Victoria's Secret (VSCO) to post quarterly earnings of $0.04 per share in its upcoming report, which indicates a year-over-year decline of 66.7%. Revenues are expected to be $1.33 billion, down 2.1% from the year-ago quarter.

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Victoria's Secret & Co. (NYSE: VSCO) shares soared after it reported third-quarter results with net sales of $1.472 billion, up 9% from $1.347 billion a year earlier and above its previously communicated guidance range of $1.390 billion to $1.420 billion.