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Here is the Only Wall Street Expert Who Raised The Price Target on BBBY Stock

Amid the bears, this Wall Street analyst is a lone bull when it comes to Bed Bath & Beyond. Here's what investors need to know.
  • Jefferies analyst Jonathan Matuszewski reiterated his neutral position on Bed Bath & Beyond but doubled his price target on BBBY shares.
  • The price target update coincided with Jefferies' sale of 12 million BBBY shares.
  • Matuszewski is optimistic about Bed Bath & Beyond's latest turnaround plan.
Figure 1: Here is the Only Wall Street Expert Who Raised The Price Target on BBBY Stock

Figure 1: Here is the Only Wall Street Expert Who Raised The Price Target on BBBY Stock

(Read more from Wall Street Memes: “Big Short” Michael Burry Says SPY’s Downturn Has Not Reached Its Bottom Yet)

Why Did Jefferies Raise the Price Target on BBBY?

Apparently, Jefferies analyst Jonathan Matuszewski is the only one on Wall Street who thinks Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report still has upside potential.

Although Matuszewski recently reiterated his neutral rating on the stock, he raised his price target from $5 to $9.

According to Matuszewski, the main reason for the price target increase is Bed Bath & Beyond's cost-cutting plan, which would involve store closings as well as staff layoffs.

Matuszewski pointed out that Bed Bath & Beyond's current turnaround plan is different from ones the company has attempted in the past.

For one thing, the new plan involves a greater recognition of exclusive products and focuses on the company's direct-to-consumer brands. In addition, it includes an improved loyalty program.

However, Matuszewski probably rates BBBY as a hold rather than a buy due to execution risk — in particular, the fact that Bed Bath & Beyond has unsuccessfully attempted multiple turnaround attempts in the past and currently has a leaner workforce and no permanent leader.

Did a Stock Sale Influence the New Price Target?

Of the 15 Wall Street analysts covering Bed Bath & Beyond's stock, the consensus is that BBBY is a strong sell. The average price target is $4.18, more than 50% below the stock's current share price.

Matuszewski's price target is just above that current price but stands out for another reason.

According to Reuters, Matuszewski raised his price target at the same time that Jefferies investment bankers brokered a sale of 12 million BBBY sales.

According to a regulatory filing, Jefferies is entitled to receive a commission of up to 3% of the amount of stock sold.

However, there's no evidence that Matuszewski's new BBBY price target was influenced by the sale.

The Bottom Line

It's not news that Bed Bath & Beyond's business fundamentals have not been healthy in recent years. The company has been burning through cash, posting negative earnings before interest, taxes, depreciation, and amortization (EBITDA) and free cash flow.

Its dramatically worsening liquidity position has raised the alarm that Bed Bath & Beyond may be heading toward insolvency.

Based on this, analysts like Bank of America's Jason Haas and KeyBanc's Bradley Thomas both have assigned BBBY a price target of $2.

Even though Matuszewski's price target may be disconnected from the Wall Street consensus, it shouldn't come a s a surprise. Jefferies analysts tend to give positive coverage to stocks with meme appeal.

For example, Jefferies is the only firm that with a neutral rating on GameStop  (GME) - Get GameStop Corporation Report, with a price target of $27.50 — pretty much in line with current levels.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)