BBWI - Bath & Body Works stock trades lower after Argus downgrades due to economic competition concerns

2023-03-17 08:51:38 ET

Bath & Body Works ( NYSE: BBWI ) slipped in early trading on Friday after Argus cut its rating to Hold from Buy.

Analyst Taylor Conrad warned that the mall-based segment of retail in which BBWI competes has been under increasing pressure from online retailers, who are rapidly gaining share.

Economic uncertainty is also noted to be substantially impacting sales for BBWI as consumers remain cautious with their purchases.

"FY23 sales were down 4% from the prior year, and management projects FY24 sales to be flat or down in mid-single digits. We also note that management did not raise the dividend for FY24 or repurchase stock in the second half of FY23."

In terms of valuation, BBWI shares are observed to be trading at 13X the firm's FY24 EPS estimate, which is at the midpoint of the historical average range of 7X to 19X. The price/sales ratio of 1.4X is also at the midpoint of the historical average range of 0.7X to 2.0X.

Conrad and team said they would look lift BBWI back to a Buy rating when the economy stabilizes and if management can overcome competition from online retailers.

Shares of Bath & Body Works ( BBWI ) fell 1.70% in premarket trading to $34.65.

See all the valuation metrics on BBWI.

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