In a report released yesterday, Lorraine Hutchinson from Bank of America Securities reiterated a Buy rating on Bath & Body Works (BBWI – Research Report), with a price target of $40.00.
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Lorraine Hutchinson’s rating is based on Bath & Body Works’ promising sales growth and robust margin profile, which she believes justifies a higher valuation multiple. The company’s first-quarter earnings per share met expectations, supported by an expansion in gross margin, indicating that new product offerings are gaining traction. Sales reached $1.4 billion, marking a 3% increase, with all core categories experiencing growth and international sales rising by 10% due to shipment timing.
Despite the challenges posed by increased tariffs, Bath & Body Works has maintained its fiscal 2025 sales and earnings outlook. The company is implementing strategies to mitigate tariff impacts, such as adjusting sourcing and pricing, and focusing on innovation-driven average unit retail increases. Under the leadership of new CEO Daniel Heaf, the marketing strategy is shifting away from promotions towards storytelling and innovation, aiming to emotionally engage customers, particularly younger demographics. These factors contribute to Hutchinson’s confidence in the company’s future performance, leading to her Buy rating.
Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as Bath & Body Works, Nike, and Ross Stores. According to TipRanks, Hutchinson has an average return of 7.7% and a 53.94% success rate on recommended stocks.
In another report released yesterday, BMO Capital also reiterated a Buy rating on the stock with a $50.00 price target.