Bullish indicating open at $55-$60, IPO prices at $37
On Tuesday, Raymond (NSE:RYMD) James analyst Olivia Tong announced an increase in the price target for Bath & Body Works Inc. (NYSE:BBWI) to $46.00, up from the previous $42.00, while maintaining an Outperform rating on the company’s shares. The adjustment comes as Bath & Body Works prepares to report its fourth-quarter results and provide guidance for the fiscal year 2025 before the market opens this Thursday.
Tong’s optimism about the company’s outlook is based on various initiatives that are expected to drive consistent and accelerating sales and profit growth in FY25. With EBITDA reaching $1.57 billion in the last twelve months, the company has demonstrated strong operational performance. Among these initiatives are new product collaborations, including the recently launched Disney (NYSE:DIS) Princess Collection. The analyst also noted the potential for revenue improvement stemming from a stabilization in demand for candles and soaps/sanitizers, as well as the brand’s expansion into new markets such as men’s products, laundry, and pet care.
Bath & Body Works aims to bounce back from execution challenges faced in the previous year, particularly the underperformance of the Semi-Annual Sale in the second quarter of 2024. Tong highlighted that the company’s Loyalty program continues to gain traction, which should contribute positively to future performance.
Additionally, Bath & Body Works benefits from having 85% of its products manufactured in North America, which Tong believes positions the company advantageously to avoid tariff risks that could impact its peers. This strategic advantage could be a key factor in the company’s ability to maintain stable growth amidst a challenging global trade environment.
Investors and market watchers will be looking forward to the company’s upcoming earnings report and guidance for the next fiscal year to assess the potential impact of these strategies on Bath & Body Works’ financial trajectory.
In other recent news, Bath & Body Works has been the subject of several notable developments. Barclays (LON:BARC) upgraded the company’s stock rating from Underweight to Equalweight, setting a price target of $43. This change comes as analysts observe a positive trend in merchandise margins and a successful introduction of new product categories. JPMorgan also upgraded Bath & Body Works, raising the stock rating from Neutral to Overweight with a new price target of $47, citing a "fundamental inflection" in revenue and earnings. Meanwhile, Citi maintained a Neutral rating with a $40 target, anticipating that the company will surpass fourth-quarter earnings expectations with a projected EPS of $2.07.
In corporate news, Bath & Body Works announced the departure of Chief Human Resources Officer Deon Riley, effective January 31, 2025, as part of an orderly transition process. The company is actively searching for Riley’s successor to fill the vacancy. Additionally, Bath & Body Works declared its plan to redeem all remaining 9.375% Senior Notes due 2025, a strategic move aimed at managing its debt. This redemption is scheduled for January 30, 2025, with financial details to be determined by the terms of the indenture agreement. These recent developments reflect Bath & Body Works’ ongoing efforts to enhance its financial and operational strategies.
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