Shareholders of Bath & Body Works, Inc. (NYSE:BBWI) will be pleased this week, given that the stock price is up 18% to US$20.36 following its latest first-quarter results. Revenues were US$1.4b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.90, an impressive 215% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

After the latest results, the consensus from Bath & Body Works' 15 analysts is for revenues of US$7.10b in 2027, which would reflect a small 2.0% decline in revenue compared to the last year of performance. Statutory earnings per share are expected to nosedive 22% to US$2.80 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$7.08b and earnings per share (EPS) of US$2.58 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$25.86, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Bath & Body Works analyst has a price target of US$54.00 per share, while the most pessimistic values it at US$19.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 0.4% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 2.7% decline in revenue until the end of 2027. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.2% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Bath & Body Works to suffer worse than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Bath & Body Works' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Bath & Body Works' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$25.86, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Bath & Body Works going out to 2029, and you can see them free on our platform here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.