Citi has raised its price target on Australia’s Baby Bunting Group (ASX:BBN), it is predicting higher gross margins and reduced costs will boost earnings up to fiscal year 2025.

Citi has raised its price target to A$2.20 from A$1.65, while retaining its ‘neutral’ rating.

Citi believes BBN could benefit from lower international freight costs, increased private label sales, and loyalty program optimization.

The bank has increased its FY24 core net profit forecast by 36.2% to A$18.5 million, and by 38.7% to A$26.3 million for FY25.

Among seven analysts, three recommend buying BBN or higher, and four recommend holding; their median price target stands at A$2.10.

BBN shares have declined by 22.9% this year, as of the last close.

The Baby Bunting Group (ASX:BBN) is an Australian company specializing in the supply of a diverse range of baby products including prams, clothes, and toys.