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‘Makes a Lot of Scents’: Raymond James Starts Bath & Body Works at Strong Buy

2022.07.13 17:36

'Makes a Lot of Scents': Raymond James Starts Bath & Body Works at Strong Buy
‘Makes a Lot of Scents’: Raymond James Starts Bath & Body Works at Strong Buy, Sees Nearly 70% Upside

By Senad Karaahmetovic

Raymond James analyst Olivia Tong initiated the research coverage on Bath & Body Works (NYSE:BBWI) at Strong Buy with a $45 per share price target.

The analyst believes that the current BBWI stock price is “discounting significantly worse trends, suggesting almost a complete wind-down of the growth the company realized during the pandemic.”

Tong added that shares have been “overly punished” so far, even if the U.S. enters into a recession that proves to be worse than that of 2008/2009.

On the fundamentals, Tong is very positive as she sees a long runway of growth ahead for BBWI once comps normalize.

“Our positive view is supported by: 1) leading market shares in Personal Care & Home Fragrances; 2) a mostly domestic, vertically-integrated supply chain, allowing BBWI to navigate logistics challenges better than peers; 3) square footage growth and optimization, including white space opportunities in new categories and geographies; 4) a loyalty program fully rolling out this year, which should drive improved retention; 5) margins at the high end of peers; and 6) strong cash generation, resulting in share buybacks along with its dividend,” Tong told clients in a note.

BBWI shares are down over 60% YTD.

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