On Friday, Telsey Advisory Group adjusted its price target for Bath & Body Works Inc. (NYSE:BBWI) to $53.00, up from the previous $50.00, while reiterating an Outperform rating on the stock. The adjustment follows a strong fiscal year for the company, marked by four quarters of earnings surpassing expectations and a notable performance during the critical holiday season.
The company's fourth-quarter results were highlighted as a testament to the brand's health and customer appeal. Telsey noted that the year-end earnings reflect a well-received product lineup and brand loyalty, despite the conservative fiscal year 2024 guidance provided by Bath & Body Works.
The guidance's upper range was just below the consensus by one cent, acknowledging the potential challenges posed by the current economic climate and variable consumer spending patterns.
Telsey remains optimistic about Bath & Body Works' prospects, citing the company's established market presence and a devoted customer base within a consumer sector characterized by frequent purchases of consumable goods.
The revised price target of $53 is based on a projected earnings growth in the fiscal year 2024, with Telsey applying a 14x multiple to its two-year forward earnings per share (EPS) estimate of $3.78. This valuation is consistent with the multiples observed in recent trading. The updated target reflects Telsey's anticipation of continued earnings expansion for Bath & Body Works in the coming year.
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