Bullish indicating open at $55-$60, IPO prices at $37
Tuesday, Bath & Body Works Inc. (NYSE:BBWI) stock price target was raised by UBS analysts from $32.00 to $36.00, while maintaining a Neutral rating. The adjustment followed the company’s preannouncement of Q1 earnings per share (EPS) on Monday, coupled with the news that Daniel Heaf will succeed Gina Boswell as CEO.
Bath & Body Works also confirmed its fiscal year 2025 (FY25) EPS guidance range of $3.25-$3.60. Analysts at UBS believe that the company’s stock movement will likely depend on the market’s response to any new strategic initiatives introduced by Heaf and updates to the FY25 and Q2 guidance.
UBS analysts anticipate that Heaf’s comments may indicate a ramp-up in marketing investments over the next twelve months (NTM). However, they are skeptical that this increased spending will significantly alter the company’s current financial outlook. Consequently, the expectation is that Bath & Body Works will reiterate its existing FY25 EPS forecast.
The report on Bath & Body Works’ Q1 performance is not expected to significantly influence analysts’ estimates or the company’s price-to-earnings (P/E) ratio. The market has seemingly already factored in these outcomes, thus UBS predicts that the earnings report will not drastically affect the stock’s valuation.
The options market has priced in an approximate ±9.0% movement in Bath & Body Works’ stock price around the earnings event, compared to a 7.0% average historical fluctuation. UBS anticipates that the event will be relatively low in volatility.
In other recent news, Bath & Body Works has announced preliminary first-quarter earnings per share (EPS) of $0.49, surpassing the consensus estimate of $0.45, with a 3% increase in sales contributing to this performance. The company has reiterated its guidance for fiscal year 2025, projecting an EPS range of $3.25 to $3.60, maintaining this outlook despite increased tariffs on Chinese imports. A significant leadership change was also announced, with Daniel Heaf taking over as CEO, a move seen by analysts as pivotal for the company’s growth and innovation strategies. Citi has responded by lifting its price target for Bath & Body Works to $42, while maintaining a Buy rating. Similarly, TD Cowen, BofA Securities, and BMO Capital Markets have all maintained positive ratings, with price targets of $48, $45, and $50 respectively, citing the company’s strong fundamentals and potential for growth under new leadership. Piper Sandler also reaffirmed its Overweight rating with a $39 price target, highlighting the company’s robust performance and strategic direction under the new CEO. Analysts believe Heaf’s experience will help Bath & Body Works expand its market presence and improve engagement with younger consumers, particularly in the fragrance and beauty segments. The company’s ability to exceed first-quarter expectations and maintain its fiscal outlook has been well-received by investors and analysts alike.
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