Small-cap stock %Bath&BodyWorks (NYSE: $BBWI) is on the recovery trail and attracting attention on Wall Street.
After a steep decline, shares of the beauty retailer are up 6% so far this year, outpacing a 4% gain in the benchmark S&P 500 index.
Over the last five years, Bath & Body Works stock has gained 106% even with the downturn in 2024. The company’s market capitalization is currently at $8.68 billion U.S.
The company based in Columbus, Ohio is a retailer that specializes in beauty and skin care products such as soaps, moisturizers, and perfume.
In addition to its share price recovering, Bath & Body Works also has an attractive valuation, trading at only nine times future earnings estimates.
The stock also pays a quarterly dividend of $0.20 U.S. per share, giving it a 2% yield, and is 25% below its 52-week high of $52.98 U.S. per share.
These metrics have gained notice on Wall Street, with a leading analyst at %JPMorganChase (NYSE: $JPM) recently upgrading the stock.
Matthew Boss, a well-regarded retail analyst at JPMorgan, increased his rating on BBWI stock to “overweight” from “neutral.”
Boss also raised his price target on the shares to $47 from $41, which implies a potential gain of nearly 20% from current levels.
The analyst said that Bath & Body Works stock declined over the past three years amid a prolonged downturn for the entire beauty industry.
However, the stock has now likely bottomed and is at an inflection point after three tough years.
Boss adds that strong free cash flow should lead Bath & Body Works to spend about $1.7 billion U.S. in share repurchases in 2025 and 2026.
Combined with the 2% dividend yield, and shareholders can earn a 9% return from Bath & Body Works capital allocation alone, notes the analyst.
Since the positive note from JPMorgan, BBWI stock has risen 15% to currently trade at $40.10 U.S. a share.
