On Monday, Goldman Sachs reiterated a Buy rating on Bath & Body Works Inc. (NYSE: NYSE:BBWI) stock with a steady price target of $52.00. According to Goldman Sachs, the recommendation is based on several key factors. First, there is an anticipation that consumers will shift their spending toward more discretionary goods in 2025.
Additionally, sales trends observed at Bath & Body Works are similar to those of other retailers that benefited during the COVID-19 pandemic, such as Best Buy (NYSE: NYSE:BBY) and Target (NYSE: NYSE:TGT), which may indicate a potential for sales stabilization.
Goldman Sachs also highlighted the company's ongoing initiatives that are expected to drive sales growth beyond its current $7.43 billion revenue base. With a robust gross profit margin of 44%, these initiatives include new collaborations, the introduction of new fragrances, increased marketing expenditures, more targeted and personalized marketing strategies, and expansion into new product categories. The firm's analysis suggests that these efforts could be particularly beneficial during non-peak shopping periods.
Furthermore, Goldman Sachs views Bath & Body Works stock as undervalued, with potential for upside as the company is likely to demonstrate sustainable top-line growth in the coming quarters. The analyst's commentary underscores a positive outlook for Bath & Body Works, considering the strategic steps the company is taking to bolster its market position and financial performance.
Investors will be watching closely to see if Bath & Body Works can capitalize on these initiatives and consumer spending trends as projected by Goldman Sachs. The company's ability to achieve sustainable growth remains a focal point for both analysts and shareholders alike.
In other recent news, Bath & Body Works has demonstrated remarkable financial performance, with third-quarter sales seeing a 3% increase to $1.6 billion and earnings per share hitting $0.49. This robust performance has led to an upward revision of the company's full-year financial guidance.
TD Cowen has expressed confidence in the company's potential, maintaining a Buy rating and naming Bath & Body Works as the Best Idea for 2025. BMO Capital and Telsey Advisory Group have also maintained positive ratings, with BMO Capital reiterating an Outperform rating and Telsey Advisory Group increasing its stock price target to $43.
Analysts at Citi have maintained a Neutral rating but raised their price target from $35 to $40, while Morgan Stanley (NYSE:MS) continued its Overweight rating, raising its price target to $49. These adjustments reflect recent developments, including an increase in home fragrance sales and a reversal of the previous negative trend.
Despite facing challenges from the Middle East conflict, Bath & Body Works is preparing for a strong Q4 holiday season and expects to generate significant adjusted free cash flow. The company's loyalty program has also gained momentum, reaching 38 million active members.
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