Victoria's Secret (VSXY) is expected to see limited upside as its turnaround thesis has played out, UBS said in a Wednesday note.

The company has posted strong comparable-store sales for four straight quarters, driven by its business initiatives, and with Q1 accelerating to 13%, the positive trend is seen continuing, UBS analysts said. They said they believe that the market has already aligned with their projected ongoing margin expansion from strong sales growth and fixed cost leverage.

The analysts said they expect EPS to compound at around 14% annually over the four years after fiscal 2026, but the stock's valuation is in the high end of US specialty retailers at 15x of their estimated fiscal 2027 EPS.

The company's stock has surged 47.4% following Q1 results, and the analysts said they see limited upside to their new price target of $90. Victoria's Secret currently has a balanced risk-reward profile, according to the note.

UBS downgraded the company's stock rating to neutral from buy and adjusted the price target to $90 from $81.

Price: 74.04, Change: -6.03, Percent Change: -7.53