JPMorgan lifts Bath&Body Works stock rating as it sees fundamental inflection

Investing.comFeb 19, 2025 1:46 AM

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Investing.com -- JPMorgan (NYSE:JPM) upgraded Bath&Body Works (NYSE:BBWI) to "Overweight" from "Neutral" given an improving outlook for both revenue and profitability into fiscal 2025. Brokerage also raised its price target to $47 on expectations of steady revenue growth and margin expansion.

JPMorgan now forecasts fiscal 2025 per share profit of $3.66, slightly above Wall Street estimates, and fiscal 2026 EPS of $4.06. The brokerage highlighted that BBWI has significantly underperformed the S&P 500 over the past three years, trading at a deep discount to beauty peers despite its high-teens operating margin profile.

The bank’s valuation analysis suggests potential upside beyond its target, with a peer regression model pointing to a possible $65 equity value. JPMorgan also noted that ongoing share repurchases could further support EPS growth.

“The combination of consistent revenue growth&incremental acceleration opportunities within adjacencies or through collaborations, expanding margins, and visible shareholder returns with FCF generation annually supporting a consistent dividend yield&share repurchase program, supports our OW rating,” analyst at JP Morgan said.

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