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On Thursday, BMO Capital Markets sustained its positive stance on Bath & Body Works Inc. (NYSE:BBWI), with analyst Simeon Siegel reiterating an Outperform rating and maintaining the $50.00 price target for the company’s shares. The reaffirmation follows Bath & Body Works’ first-quarter earnings, which aligned with its preliminary announcement, showcasing a notable gross margin improvement of 160 basis points.
The company’s management has set the second-quarter expectations below the consensus estimates of Wall Street and reiterated the full-year guidance that was updated last week. This outlook accounts for the anticipated effects of the existing tariffs, although further details are expected to be clarified during the earnings call. Additionally, the call is anticipated to introduce Daniel Heaf, the newly announced Chief Executive Officer of Bath & Body Works.
Bath & Body Works’ financial performance reflects stability as the company managed to meet its previously stated first-quarter projections. Siegel’s commentary highlighted the company’s robust gross margin performance and the conservative nature of its second-quarter forecast. Despite the cautious short-term outlook, the yearly guidance remains unchanged, suggesting a steady operational approach amidst the current tariff environment.
Investors and analysts alike are poised to gain additional insights from the earnings call, which will not only address the tariff impacts but also offer the first formal introduction to CEO Daniel Heaf. His leadership is expected to be a focal point for the company’s strategic direction moving forward.
Siegel’s analysis suggests a belief that Bath & Body Works has yet to fully realize its financial potential and is currently undervalued in the market. The consistent Outperform rating and the $50.00 price target indicate confidence in the company’s value proposition and its ability to surpass current earnings levels.
In other recent news, Bath & Body Works Inc. announced an amendment to its senior secured asset-based revolving credit facility, extending the maturity date by five years. This development comes as the company also pre-announced its first-quarter earnings per share (EPS) of $0.49, surpassing the consensus estimate of $0.45, with a 3% increase in sales. Citi analyst Paul Lejuez responded by raising the company’s price target to $42, maintaining a Buy rating, while UBS increased their target to $36, keeping a Neutral rating. The company also confirmed its fiscal year 2025 EPS guidance range of $3.25 to $3.60.
Amid these financial updates, Bath & Body Works announced a leadership change with Daniel Heaf succeeding Gina Boswell as CEO. Analysts at TD Cowen maintained a Buy rating with a $48 price target, expressing optimism about Heaf’s potential to drive growth and appeal to younger consumers. Piper Sandler analysts have a positive outlook on beauty stocks, including Bath & Body Works, noting resilience in the fragrance category. They expect the company to benefit from strategic investments in this area.
The company is expected to maintain its fiscal year 2025 guidance despite increased tariffs, thanks to its strong domestic supply chain. Analysts view these recent developments as strategically positioning Bath & Body Works for continued growth and expansion in the beauty and fragrance sectors.
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