Citi analyst Paul Lejuez downgraded Bath & Body Works to Neutral from Buy with a price target of $48, down from $50. The analyst anticipates a "modest" Q4 beat driven by slightly better comps and margins, but believes investor focus will be on where new CEO Gina Boswell sets the bar for fiscal 2023 as well as longer-term margin targets. Bath & Body is facing "significant" margin headwinds, which will continue into 2023 and potentially beyond, the analyst tells investors in a research note. Citi believes Boswell will focus on cost cutting and efficiencies to offset margin pressures, but says that may take time. In the meantime, the firm sees risk of a margin "reset" and the company taking a conservative approach to 2023 guidance. As such, it believes Bath & Body’s risk/reward is more balanced at current levels.
Published first on TheFly
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