Will These Target Price Reductions Hurt Bed Bath & Beyond (BBBY) Stock Today?

NEW YORK (TheStreet) -- Both J.P. Morgan and Barclays reduced their target prices on Bed Bath & Beyond  (BBBY), which reported its fourth-quarter earnings on Wednesday.

J.P. Morgan reduced its target price to $75, decreased its estimates and set a "neutral" rating given margin pressure. Barclays reduced its target price to $80 due to lower-than-expected fourth-quarter numbers and ongoing deterioration of gross margins.

The stock was down 5.98% to $63.85 in pre-market activity on Thursday.

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Separately, TheStreet Ratings team rates BED BATH & BEYOND INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate BED BATH & BEYOND INC (BBBY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, notable return on equity, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BED BATH & BEYOND INC has improved earnings per share by 8.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BED BATH & BEYOND INC increased its bottom line by earning $4.58 versus $4.08 in the prior year. This year, the market expects an improvement in earnings ($4.80 versus $4.58).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, BED BATH & BEYOND INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 1.9% when compared to the same quarter one year prior, going from $232.75 million to $237.20 million.
  • You can view the full analysis from the report here: BBBY Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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