Bath & Body Works stock dips following mixed analyst sentiment

Shares of Bath & Body Works moved to the downside after Citi downgraded the stock to Neutral.

Video Transcript

SEANA SMITH: Kicking off with my play it's Bath and Body Works, Citi downgrading the retailer to neutral because it's worried about margins, and here's why. Those higher raw material costs and also elevated wages are expected to pressure results here going forward, at least in the short term. Citi though does see CEO Jean Boswell focusing on cost cutting to offset some of that margin pressure, but the move is quote "going to take some time."

Earlier this week, Deutsche Bank, on the other hand, raised its price target on the stock to 55 bucks a share, reiterated its buy rating, making the case that it sees quote "a path for multiple expansion," as the company looks to quote, "improve profitability." So some mixed views here on Bath and Body Works ahead of their earnings that we're getting here pretty soon. But certainly, the retail sector, lots of questions just about what exactly that's going to look like.

We just got that very strong retail sales number out this morning. Before that, there's lots of talk about a looming recession. So I don't know.

JOSH SCHAFER: 15 buys, six holds on the street on the stock, and no sells though. So it doesn't seem like anyone's overly actually bearish on the name itself, but it's basically-- it seems like a little bit of a wait and see until we get earnings coming up here in the next few weeks to sort of see what they're going to do with those margins, Dave, and what happens there. I know we were joking about it in the break, but it is kind of funny with Bed and Bath Beyond because they do sell some similar products. And then you think about all these headwinds coming at potentially Bath and Body Works and how that would impact a company like Bed and Bath Beyond.

- Oh, it feels like it awaits a very similar fate. I hate to say that, but it does feel like something that was just much more relevant in our lives 20 years ago. And it's just a matter of when, not if.

But Dan Loeb, third point we've talked about, how many companies face pressure from activist Dan Loeb's third point on 6%, hinting they might push for board seats, closely watching the company and its new CEO, among the many companies out there facing outside pressure.

JOSH SCHAFER: Activist investor watch, Dave. One of our favorite stories--

Hashtag man. Yeah, that is the trend--

SEANA SMITH: Every day--

- --of the year.

JOSH SCHAFER: --always coming up