Bath & Body Works upgraded to Overweight from Equal Weight at Barclays

Barclays analyst Adrienne Yih upgraded Bath & Body Works to Overweight from Equal Weight with a price target of $45, up from $41. The analyst also upgraded the U.S. specialty appeal retail sector to Positive from Neutral. The firm is gaining confidence in a 2024 sector recovery, citing near-certain visibility on the inventory issue being largely resolved across the entirety of U.S. consumer discretionary goods by the end of 2023, with clean inventory setting the stage for a bottoming in merchandise margins in the second half of 2023 and margin improvement in 2024. In addition, freight and supply chain recapture is expected to improve materially beginning in the second half of 2023 with strengthening tailwinds in 2024, the analyst tells investors in a research note. Barclays also believes the wallet drag of “essential”-category inflation on discretionary goods within a household is abating.