JPMorgan Cuts Bath & Body Works (BBWI) to Neutral on Multi-Year Model 'Reset'

June 29, 2022 8:51 AM EDT
Get Alerts BBWI Hot Sheet
Price: $37.36 -2.83%

Rating Summary:
    11 Buy, 2 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 18 | Down: 53 | New: 12
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JPMorgan analyst Matthew Boss slashed the rating on Bath & Body Works (NYSE: BBWI) to Neutral from Overweight with a $30.00 per share price target (down from $63.00).

The downgrade move comes after Boss cut the Q2 EPS estimate to $0.49, which is much lower than the Street consensus of $0.64. The FY23 EPS forecast goes to $3.30 while consensus is at $4.90.

“We see our below-Consensus model as a reasonable baseline for the multi-year “E”, noting incremental downside potential risk in a FY23 consumer-led recession scenario,” Boss wrote in a note.

The analyst further explained:

“We see 2Q AUR tracking down 4% Y/Y by our work (commensurate with 1Q and below mgmt’s sequential improvement expectation) with our model now embedding - 4% AUR contraction for FY22 – below mgmt's “Flat” 2022 AUR growth Y/Y assumption (see our full analysis and fieldwork below) and raising risk to mgmt’s +low-single-digit 2Q and FY22 revenue growth forecasts YOY.”

As a result, shares of the company are down over 4% in pre-market Wednesday.

By Senad Karaahmetovic

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JPMorgan, Senad Karaahmetovic