Bath & Body Works Stock Under Analyst Review Amid Turnaround Efforts

Bath & Body Works US0708301041

Major financial institutions are currently reassessing their outlook for Bath & Body Works as the retailer pushes forward with a strategic revival plan targeting 2026. This week saw several analysts adjust their price targets, contributing to notable stock volatility following a period of extended losses. The central question for investors is whether the company's new direction, which now includes a recently forged partnership with Amazon, can fuel a lasting recovery.

Analyst activity this week highlighted a convergence of opinion on the stock's near-term value. UBS revised its price target upward by approximately 23.5%, moving from $17.00 to $21.00, while maintaining a "Neutral" stance. This move followed similar adjustments by Barclays and TD Cowen, which set their targets at $20.00 and $24.00, respectively. The clustering of targets around the $20–$21 range suggests a developing consensus on the stock's short-term trading level, albeit without long-term conviction.

Initiating coverage, Deutsche Bank adopted a more cautious position, issuing a "Hold" rating with a $21.00 price target. This implies a modest downside risk of roughly 2.5% from recent levels. The bank cited several concerns, including a negative return on equity of -47.35% and a net margin of 9.50% for the last fiscal year. A year-over-year revenue decline of 1.0% further supported its restrained assessment.

The market reacted to these updates, with shares advancing 8.95% this week to approximately $22.04. Despite this jump, the equity remains in a longer-term pattern of underperformance.

The 2026 Turnaround Blueprint

Central to the recovery strategy led by CEO Daniel Heaf is an enhanced digital approach. A key component is the newly announced collaboration with Amazon, designed to extend the brand's online reach beyond its traditional mall-based footprint. For the 2025 fiscal year, management has provided guidance anticipating a slight single-digit decline in net revenue. They simultaneously forecast an adjusted earnings per share (EPS) of at least $2.87.

Recovery Hinges on Execution and Upcoming Catalysts

Investors are balancing these strategic initiatives against significant capital erosion. The total shareholder return over the past twelve months sits at -43.31%, underscoring the challenge ahead. A sustainable recovery will require both positive operational signals and the stock's ability to overcome technical resistance levels.

The next significant milestone is the quarterly report expected in late February 2026. This release will offer the first tangible data on the early impact of the Amazon partnership. Scenarios that could bolster the recovery narrative include revenue figures exceeding expectations or an adjusted EPS surpassing the $2.87 forecast. Conversely, should results fall short, downward pressure on the share price is likely to persist.