BBWI - Bath & Body Works stock sinks to 52-week low after key analyst downgrade

Bath & Body Works ( NYSE: BBWI ) shares were battered on Wednesday as J.P. Morgan analyst Matthew Boss reeled in rating on the stock after fieldwork and management conversations.

Boss explained that expectations for both top and bottom line growth in the wake of increasing inflationary pressures and more bearish expectations for sales. He added that the two factors dovetail as well, with higher “sharper” price points provoking a decrease in demand.

“The combination of moderating same-store-sales relative to pre-pandemic [and] high-single-digit comp growth, ongoing separation-related SG&A investments, and [average unit revenue] pressure as the model returns to a normalized cadence of promotions present potential earnings headwinds,” Boss explained.

As such, he indicated that his previous “Buy” rating on shares is no longer justifiable. Boss therefore downgraded the stock to “Neutral” and slashed his price target from $63 to just $30, a more than 50% reduction. He explained that “[Bath & Body Works] ( BBWI ) long-term algorithm including a +MSD EPS contribution from share repurchases” allowed him to remain Neutral, balancing risk and staving off a more bearish rating.

While not quite as stark the decline for its peer in ampersands and bathroom accouterments in Bed Bath & Beyond, Bath & Body Works ( BBWI ) fell sharply. The stock had fallen over 8% in afternoon trading to touch the lowest levels seen since 2020 and adding to an over 60% decline for the stock since the start of 2022.

Read more on why SeekingAlpha’s Quant rating system sees significant downside ahead for shares .

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