Why Bath & Body Works Stock Jumped Nearly 10% on Tuesday

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Key Takeaways

• Shares of Bath & Body Works jumped on Tuesday after the retailer received an upgrade and a higher cost target from JPMorgan.
• The analysts said a post-pandemic drop in sales of candles and hand sanitizers is normalizing and won’t be enduring much impact on sales.
• The company also recently launched a promotion with scents featuring Disney Princesses, which JPMorgan divulged could help drive full-price sales.

Bath & Body Works (BBWI) shares rose almost 10% on Tuesday after analysts from JPMorgan upgraded the wares, citing encouraging recent product launches and shrinking post-pandemic headwinds.

The analysts raised the stock to “overweight” from “remote” Tuesday and lifted their price target to $47 from $41 previously. The new rating comes as the retailer is set to sign in fourth-quarter earnings on Feb. 27.

Aside from JPMorgan, analysts who follow Bath & Body Works and are tracked by Visible Alpha are to some bullish on the retailer’s stock, with five “buy,” three “hold,” and one “sell” rating among the nine tracked go-betweens. The stock has an average price target of $43.56, which suggests an upside of more than 13% compared with Tuesday’s foot in the door price. It closed at $40.03 Tuesday, a 9.75% gain.

JPM Says Leading Categories, Disney Partnership Could Spur Sales

The JPMorgan analysts said Bath & Body Works is undervalued compared with its peers in the beauty section, while being a market leader in some of its important categories like fragrances and hand sanitizers. The analysts also weighted headwinds like a post-pandemic drop in sales of candles and hand sanitizers are normalizing and likely won’t have much results on sales moving forward.

They also said the company recently launched its biggest collaboration, with a new calling of 85 products rolled out earlier this week with scents tied to Disney (DIS) Princess characters that could expropriate drive sales.

The analysts said the product line is about three times the size of Bath & Body Make excites’ past collaborations with Netflix (NFLX), when it created product lines based on shows like “Bridgerton” and “Visitor Things.”