BBWI - Bath & Body Works cut to Hold as Citi expects cautious 2023 guide

Bath & Body Works ( NYSE: BBWI ) stock slipped in premarket hours on Wednesday as Citi expects a light forecast for the full-year.

The Ohio-based specialty retailer is due to report earnings on February 24, seeking to extend a nearly 40% rise for the stock since October 2022. While Citi analyst Paul Lejuez expects a strong Q4 print, guidance could be troublesome, in his view.

“BBWI is facing significant margin headwinds which we expect to continue into 2023 and potentially beyond,” he told clients. “We believe [CEO Gina] Boswell will focus on cost cutting/efficiencies to offset margin pressures, but that may take time.”

As such, he expects a below consensus forecast for earnings per share in 2023, which could cause the stock to sink on earnings day. Lejuez advised that “the risk/reward is more balanced at current levels,” making a Hold rating appropriate.

Alongside the downgrade to Hold from Buy, Lejuez cut his price target to $48 from $50. Shares of Bath & Body Works ( BBWI ) slid 1.8% prior to the opening bell on Wednesday.

Read more on major investors increasing stakes in the retailer .

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