Hanesbrands, Bath & Body Works downgraded at Evercore amid expected sales slowdown

Hanesbrands, Bath & Body Works downgraded at Evercore amid expected sales slowdown


Tim Boyle

Softlines retail is due for a pullback as a weakening consumer and tough comps curtail growth for many stocks populating the space, according to Evercore analyst Omar Saad.

Within the space, Hanesbrands Inc. (NYSE:HBI) and Bath & Body Works (NYSE:BBWI) are likely to be among the hardest hit in his estimation. Saad explained that consumer spending is not only slowing amid eroding confidence, but shifting rapidly towards experiences after COVID canceled travel and leisure plans over the past few years. He noted that experiential spending overall has only turned positive versus 2019 levels in the past three months, suggesting the turn in the trend is in its early stages.

Additionally, both Hanesbrands (HBI) and Bath & Body Works (BBWI) were cited as “pandemic winners” alongside other names like Peloton, Etsy, and Crocs. A reversion to the mean in spending habits in many of these names is to be expected, Saad advised.

Given the analysis’ unkind indicators, he downgraded both Bath & Body Works (BBWI) and Hanesbrands (HBI) to Hold-equivalent ratings from prior Buy ratings. He also slashed his price target on each, taking his target on Bath & Body Works (BBWI) to $28 from $60 and trimming his target on Hanesbrands (HBI) from $18 to $12. Shortly after Wednesday’s market open, shares of Bath & Body Works (BBWI) and Hanesbrands (HBI) fell by 0.71{3b930a6ca12a59604e1bbadfc55b7d1b7a0aa8613f1ab9377cace0d5afcb5fb9} and 2.21{3b930a6ca12a59604e1bbadfc55b7d1b7a0aa8613f1ab9377cace0d5afcb5fb9}, respectively.

Read more on Raymond James’ sharply contrasting view of Bath & Body Works.

Quoted from Various Sources

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