Bed Bath & Beyond (BBBY) - Get Report on Thursday was downgraded by Bank of America and Telsey Advisory Group, meaning at least eight firms investment firms had cut their ratings on the home-goods retailer.
Shares of the Union, N.J., company at last check were off 36% to $33.93, after trading platforms including Robinhood and Charles Schwab’s (SCHW) - Get Report TD Ameritrade put restrictions on the stock and others including GameStop (GME) - Get Report.
The analyst decisions come during a trading frenzy sparked largely by the Reddit-based chatroom Wallstreetbets.
In an investors' note entitled "Too Far, Too Fast for a Turnaround Story," Telsey analyst Joseph Feldman cut Bed Bath & Beyond to market perform from outperform.
The analyst, who raised his price target to $40 from $27, said that the company's share-price increase of about 120% in the past three months — and up about 150% since his upgrade to outperform in October —"far exceeds our high fundamental expectations and projected multiyear benefits from the company’s transformation."
"The sudden, sharp surge in Bed Bath & Beyond’s share price and valuation likely has been fueled by a short squeeze, given the high short interest (over 60%), and speculation by retail investors, fueled in chat rooms, much like GameStop," he wrote.
"To be clear, we like the turnaround story at Bed Bath & Beyond, but the share price has gotten ahead of itself."
Bank of America analyst Curtis Nagle said he was downgrading the stock to neutral from buy, with a price target of $55, up from $31, "following a significant increase in share price and valuation."
"We still see the potential for upside on short squeezing (see below for technical analysis) and remain very bullish on the prospects of a fundamental earnings turnaround," Nagle said.
"[But] the sheer speed and magnitude of the price increase make it harder for us to justify a buy rating."
Bed Bath & Beyond was downgraded Wednesday by analysts at Wedbush and Baird in response to the company's recent stock-price surge.
Standpoint Research analyst Ronnie Moas downgraded the company to hold from buy on Wednesday, while Odeon Capital analyst Alexander Arnold downgraded Bed Bath & Beyond to hold from buy.
On Tuesday, Bed Bath & Beyond received a rare double downgrade from analysts at Raymond James, to market perform from strong buy, while UBS downgraded the company to sell from neutral.