Bath & Body Works (BBWI) Dips on Big EPS Forecast Cut, Analyst Sees Several Positive Catalysts

August 18, 2022 6:51 AM EDT
Get Alerts BBWI Hot Sheet
Price: $32.60 -3.06%

Rating Summary:
    11 Buy, 2 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 10 | Down: 4 | New: 31
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Shares of Bath & Body Works (NASDAQ: BBWI) are down about 1% after the company cut its annual profit forecast.

BBWI topped its recent preannouncement of $0.40-0.42 by reporting EPS from continuing operations at 52c, also beating the 45c consensus. Revenue came in at $1.62 billion, slightly below the $1.64 billion consensus.

“Our results in the second quarter were better than our most recent expectations, reflecting improvement in sales toward the end of the quarter as customers responded to newness in our assortment as well as favorability in expenses,” Sarah Nash, Executive Chair and Interim Chief Executive Officer, commented.

For this quarter, BBWI sees EPS from continuing operations in the range of 10c to 20c with the consensus standing at 34c.

On a full-year basis, EPS is seen between $2.70 to $3.00, much lower than the prior guidance of $3.80 to $4.15, and below the consensus of $3.07.

BofA analyst Lorraine Hutchinson reiterated a Buy rating and hiked the price target to $48 from $40 as she sees a rich catalyst path for the second half of the year.

“We expect the company to announce a new CEO and think that as sales stabilize, investor focus will shift to the outsized operating margin expansion opportunity in 2023, leading to multiple expansion,” Hutchinson explained.

Raymond James analyst Olivia Tong added:

“BBWI reported FQ3 results after the close and updated its FY outlook. FQ3 sales and EPS beat our estimates, which were reset last month, as slowing consumer demand, a lower than anticipated lift from the semi-annual sale and inventory culling was partly offset by improved traffic and spending in 2H July.”

By Senad Karaahmetovic

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