Bath & Body Works' (BBWI) path to achieving consistent growth of greater than low-single-digit percentage and margin expansion appears "increasingly out of reach," Morgan Stanley said in a Friday note.

The company faces potentially permanent revenue headwinds that could cause its revenue to decline by low-single-digits, Morgan Stanley analysts said. They added that if the company's revenue growth declines or stays low, it will likely cause profitability to worsen.

Bath & Body Works' Q3 underperformance, guidance reduction, and new strategic have confirmed the analysts' concerns that a consistent return to low-single-digit growth and margin expansion could take longer than expected, they said.

While the company's new management has seemingly identified many of the likely causes of revenue and profitability headwinds, the announced strategies to correct these shortcomings are unproven, and will take time to execute, the analysts said. Structural industry changes may even cause the company's falling topline trajectory to potentially become irreversible, according to the note.

Morgan Stanley downgraded the company's stock to equal-weight from overweight and reduced the price target to $18 from $43.

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