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Why Bath & Body Works Stock Jumped Nearly 10% on Tuesday
Key Takeaways
Bath & Body Works ( BBWI ) shares rose almost 10% on Tuesday after analysts from JPMorgan upgraded the stock, citing encouraging recent product launches and shrinking post-pandemic headwinds.
The analysts raised the stock to "overweight" from "neutral" Tuesday and lifted their price target to $47 from $41 previously. The new rating comes as the retailer is set to report fourth-quarter earnings on Feb. 27.
Aside from JPMorgan, analysts who follow Bath & Body Works and are tracked by Visible Alpha are somewhat bullish on the retailer's stock, with five "buy," three "hold," and one "sell" rating among the nine tracked brokers . The stock has an average price target of $43.56, which suggests an upside of more than 13% compared with Tuesday's opening price. It closed at $40.03 Tuesday, a 9.75% gain.
JPM Says Leading Categories, Disney Partnership Could Drive Sales
The JPMorgan analysts said Bath & Body Works is undervalued compared with its peers in the beauty category, while being a market leader in some of its important categories like fragrances and hand sanitizers. The analysts also said headwinds like a post-pandemic drop in sales of candles and hand sanitizers are normalizing and likely won't have much impact on sales moving forward.
They also said the company recently launched its biggest collaboration, with a new line of 85 products rolled out earlier this week with scents tied to Disney ( DIS ) Princess characters that could help drive sales.
The analysts said the product line is about three times the size of Bath & Body Works' past collaborations with Netflix ( NFLX ), when it created product lines based on shows like "Bridgerton" and "Stranger Things. "
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