Why This Bed Bath & Beyond Analyst Is Turning Bearish: 'Fundamental Issues'

Shares of Bed Bath & Beyond Inc (NASDAQ: BBBY) have gained more than 35% over the last three months after gaining the attention of retail traders in the WallStreetBets Reddit forum, according to B. Riley Securities.

The Bed Bath & Beyond Analyst: Susan Anderson downgraded Bed Bath & Beyond from Neutral to Sell with an unchanged $5 price target.  

The Bed Bath & Beyond Takeaways: The stock has reached “unrealistic” valuations, although this could provide a “long-term lifeline,” Anderson said in the Tuesday downgrade note.

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“We are estimating a 2Q22 EPS loss of $(1.63) vs. the Street at $(1.58) with sales down –27.0% vs. the Street at –23.5%,” the analyst said. “We estimate GM to deleverage –750 bps vs. the Street at –420 bps due to seeing a significant increase in promos and markdowns.”  

Anderson advised investors to remain on the sidelines and said Bed Bath & Beyond is “facing fundamental issues with its business including declining liquidity and concern around the upcoming August 2024 $300M note with approximately $285M left to repay.”

BBBY Price Action: Shares of Bed Bath & Beyond were trading 22.25% higher at $19.56 Tuesday morning. 

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