Bed Bath & Beyond: What Wall Street Is Saying

Bed Bath & Beyond was the subject of a rare double downgrade by analysts at Raymond James.
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Shares of Bed Bath & Beyond  (BBBY) - Get Report fell premarket following a pair of bullish analyst notes, including a rare double downgrade from analysts at Raymond James.

Bed Bath shares were down 2.84% to $30.36 on Tuesday after rising more than 23% in the past three days. 

Here is what Wall Street is saying about Bed Bath & Beyond's stock on Tuesday:

Raymond James (Downgrade to Market Perform from Strong Buy, PT unchanged at $26)

BBBY is now trading above our prior target, and we can not justify moving our target higher to maintain our Strong Buy rating (15% required upside). To be clear, our change in opinion is not a reflection on Bed Bath & Beyond's turnaround potential. We continue to believe that the new management team understands the core issues within the business and has already started to show progress in recent results (gross margin, comps and asset sales). In addition, Bed Bath & Beyond’s ~$2.2  billion of available liquidity provides management ample flexibility to tackle the turnaround (a key difference versus other retail turnarounds).

- Bobby Griffin

UBS (Downgrade to Sell from Neutral, $20 PT unchanged) 

With BBBY shares up 73% YTD, our call is to take profits. The recent move has tilted the risk-reward to the downside. The shares will eventually face stiff resistance from 1) A turnaround that probably won't deliver linear progress. The challenges at BBBY are deep & will take time to fix. We believe the typical BBBY customer visits less than 5x per  year. Thus, the retailer doesn't have the frequency to showcase changes it might make. Plus, it runs the risk that other retailers continue to siphon off these visits. 2) The headwind to the HF sector from demand pull forward. Roughly 2/3 of BBBY's sales are from items such as kitchen & tabletop, basic housewares and general home furnishings. Industry-wide sales of these goods will face pressure as consumers shift spending to areas like food away from home & travel

-Michael Lasser