Wedbush analyst Seth Basham raised his share-price target to $18 from $15 and maintained his outperform rating.
The Union, N.J., chain has rebounded to positive comparisons in recent months and is "on the cusp of a dramatic improvement in profitability," he wrote in a commentary cited by The Fly. Yet the stock continues to languish at distressed levels, he notes.
Bed Bath recently traded at $12.30, up 7.7%. The shares had slumped 34% year to date through Wednesday.
Based on a conservative forecast, Bed Bath may be able to reach almost $850 million in earnings before interest, taxes, depreciation and amortization in 2022, Basham said.
Morningstar analyst Jaime Katz has mixed views about the company.
“With an attempt under Chief Executive Mark Tritton to stall share losses and prevent further margin degradation, ... the company is heading in the right direction to improve profitability from depressed levels (posting an operating margin of just 1% in 2019),” she wrote in a report last month.
“Gains in sales and profitability over the long term, however, could be bound by the competitive home-furnishing landscape, where price is often the motivating factor in conversion.
"As such, we plan to maintain our long-term sales decline forecast between 2%-3%, as Bed Bath pursues further store closures.”
Katz puts fair value for the stock at $11.80.
“While e-commerce should begin to resonate with a wider customer base, it is often the case in retail that shipping and e-commerce-related costs can dent the operating margin,” she said. “We plan to hold the line on our low-single-digit long-term operating margin forecast.”