We think the company's strength in fragrance more than offsets weakness in lingerie.
Healthy margins trump the added cyclicality resulting from recent deals.
We plan to modestly lift our fair value estimate but think full earnings potential may be constrained by pricing competition.
Closing stores and spinning off Old Navy will allow the firm to better capitalize on consumer trends and nurse the namesake business back to health.
The wide-moat firm faces headwinds, but it is best positioned to continue to win modest share.
We think the shares are undervalued, but the road to improvement could be rocky.