How Will Build-A-Bear Workshop (BBW) Stock React To This Analyst Upgrade?

NEW YORK (TheStreet) -- Build-A-Bear Workshop  (BBW) was upgraded to "outperform" from "market perform" with a price target of $14, up from $12.50, at BMO Capital Markets.

Analysts at the firm cited the toy maker's new management and improved product assortment that includes more relevant licenses and animal "skins."

Shares of Build-A-Bear Workshop closed at $10.49 on Friday.

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Separately, TheStreet Ratings team rates BUILD-A-BEAR WORKSHOP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BUILD-A-BEAR WORKSHOP INC (BBW) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that revenues have generally been declining."

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

  • BUILD-A-BEAR WORKSHOP INC has improved earnings per share by 34.2% 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. This trend suggests that the performance of the business is improving. During the past fiscal year, BUILD-A-BEAR WORKSHOP INC continued to lose money by earning -$0.15 versus -$3.01 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus -$0.15).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 30.8% when compared to the same quarter one year prior, rising from -$6.22 million to -$4.30 million.
  • BBW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Specialty Retail industry and the overall market, BUILD-A-BEAR WORKSHOP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Powered by its strong earnings growth of 34.21% and other important driving factors, this stock has surged by 48.38% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • You can view the full analysis from the report here: BBW Ratings Report
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