Bath & Body Works Stock Pops After Beat-And-Raise Quarter

Bath & Body Works (BBWI) stock is trading notably higher Monday after the specialty retailer beat top- and bottom-line expectations for its fiscal third quarter and raised its full-year outlook.

In its quarter ended November 2, Bath & Body Works said its revenue increased 3% year over year to $1.6 billion. Its earnings per share (EPS) decreased 5.8% from the year-ago period to 49 cents.

"Our strong results exceeded the high end of our net sales and earnings per diluted share guidance," said Bath & Body Works CEO Gina Boswell in a statement. "As a result, we are raising our full-year guidance to fully reflect this outperformance."

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The results topped analysts' expectations. Wall Street was anticipating revenue of $1.58 billion and earnings of 47 cents per share, according to CNBC.

As its CEO mentioned, Bath & Body Works increased its full-year outlook following the strong quarter. The company now expects to revenue to decline between 2.5% and 1.7% and earnings per share to arrive between $3.15 to $3.28. The retailer had previously said it expected revenue to be down between 4% and 2% and earnings per share of $3.06 to $3.26.

"Innovation across our core products, adjacencies, and collaborations is resonating with both new and existing customers supported by the investments we have made in marketing and technology," Boswell said. "As we enter the critical holiday period, I am pleased with our strong execution and the momentum we are building, as we drive towards sustainable, long-term profitable growth."

Is Bath & Body Works stock a buy, sell or hold?

It's been a rough year on the price charts for Bath & Body Works, which was down more than 27% heading into Monday's session. Still, most of Wall Street has kept the faith on the consumer discretionary stock. 

According to S&P Global Market Intelligence, the average analyst target price for BBWI stock is $42.76, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm UBS Global Research is taking a more cautious approach to the mid-cap stock, though, as evidenced by its a Neutral rating (equivalent to a Hold) and  $38 price target.

"Our view is a soft category demand should weigh on BBWI's fiscal 2024 sales and earnings and limit the stock from outperforming," wrote UBS Global Research analyst Jay Sole in a November 7 note. "We see little chance of upside earnings surprises or price-to-earnings expansion in the near- to medium-term. Over the long term, we think BBWI could rebound and this is a main reason our rating is not Sell."

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