Shareholders might have noticed that Bath & Body Works, Inc. (NYSE:BBWI) filed its full-year result this time last week. The early response was not positive, with shares down 3.3% to US$45.68 in the past week. It looks like a credible result overall - although revenues of US$7.4b were what the analysts expected, Bath & Body Works surprised by delivering a (statutory) profit of US$3.84 per share, an impressive 24% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, Bath & Body Works' 19 analysts currently expect revenues in 2025 to be US$7.42b, approximately in line with the last 12 months. Statutory earnings per share are forecast to sink 15% to US$3.32 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.44b and earnings per share (EPS) of US$3.39 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Despite cutting their earnings forecasts,the analysts have lifted their price target 8.7% to US$50.43, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Bath & Body Works, with the most bullish analyst valuing it at US$78.00 and the most bearish at US$40.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would also point out that the forecast 0.2% annualised revenue decline to the end of 2025 is better than the historical trend, which saw revenues shrink 12% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 5.2% per year. So while a broad number of companies are forecast to grow, unfortunately Bath & Body Works is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Bath & Body Works. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Bath & Body Works' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Bath & Body Works going out to 2027, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Bath & Body Works (1 can't be ignored) you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.