Victoria's Secret (VSCO) shares will likely see a "strong path" in the next 12 months, due to factors like the company's expected solid Q3 results, UBS said in a note emailed Wednesday.

The company's "product pipeline and marketing initiatives should sustain the momentum into Holiday" and lead to another middle single digit comp for Q4, UBS said.

The company is facing near-term tariff headwinds, but 2025 will likely be the trough in its EBIT margin and earnings, the note said.

The investment firm believes the company's management will be able to reposition its Victoria's Secret and PINK brands, which should result in "sustained comp sales growth post several years of declines."

UBS said its forecasts for the company "imply meaningful upside" of 9% and 22% to consensus estimates for 2025 and 2026. "Our sense is consensus is not reflecting VSCO's operating leverage," the note said.

UBS upgraded Victoria's Secret to buy from neutral and lifted its price target to $46 from $25.

Price: 36.96, Change: +2.43, Percent Change: +7.04