Citigroup upgraded Bath & Body Works (BBWI, Financials) to Buy from Neutral, citing expectations of a sales rebound in the second half of 2024.
Notwithstanding a market sell-off following the company's first-quarter projections, analyst Paul Lejuez boosted his price objective to $48 from $40, a 20% rise.
Lejuez said the retailer's fiscal 2025 income projection shows 1% to 3% increase, which might result in a higher value multiple. Key drivers of expansion, he said, include better execution, a robust pipeline of new goods, and home fragrance market constraints being lessened.
Chief Financial Officer Eva Boratto said the business is concentrating on product innovation, marketing, and technology expenditures to speed sales; operational improvements and cost control are anticipated to support profitability. By means of dividends and share buybacks, Bath & Body Works intends to keep returning cash to shareholders.
Lejuez projects that in 2025 the business will provide $820 million in free cash flow, therefore boosting shareholder returns.
Other analysts see the stock in good shape. Citing trade policy uncertainties and value-driven customer behavior as possible obstacles, Dana Telsey of Telsey Advisory Group reaffirmed an Outperform rating with a $43 price target but said that the company's cautious outlook left opportunity for upside.
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