Bath & Body Works Inc. (BBWI) PT Raised to $40 at Citi

Citi analyst Paul Lejuez raised the price target on Bath & Body Works Inc. (NYSE: BBWI) to $40.00 (from $35.00) while maintaining a Neutral rating.

The analyst comments "3Q sales +3% and EPS $0.49 beat cons despite a slightly weaker GM vs cons. 3Q marked the first qtr since 4Q21 where comps were not negative (we est flat), and based on mgmt commentary, 4QTD trends are off to a solid start. Home fragrance sales inflected positively (+LSD vs -LSD in 1H), a category that has been weak since 2021, and mgmt signaled that they no longer expect post-Covid category normalization to be a headwind, leaving us more optimistic about BBWI delivering comp growth in F25. And while BBWI is being agile on promos, limiting merch margin upside, we expect cost savings initiatives to help offset AUR headwinds into 1H25. With a more optimistic topline outlook, we see a clearer path to margin expansion in F25 and beyond. However, with shares +17% after the print, and expectations now higher, we see the risk/reward as balanced at current levels."

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