Bed Bath & Beyond shares have soared since earnings beat expectations
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Bed Bath & Beyond Inc. is reaping the rewards of an ongoing turnaround, but analysts say the company is also getting a boost from a coronavirus-impacted environment that has been favorable to the home space.
Bed Bath & Beyond
BBBY,
shares are soaring after second-quarter earnings beat expectations, with the company reporting the first same-store sales increase since 2016. Shares were up nearly 9% in Friday trading, and have rallied more than 40% for the week.
Many research groups have raised their price target on Bed Bath & Beyond shares.
But UBS says the results need to be put in the context of a
strong home furnishings category.
“It’s clear to us that the rising tide is lifting all boats,” analysts led by Michael Lasser wrote. “However, Bed Bath & Beyond also executed more effectively to take advantage of this tailwind.”
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UBS rates Bed Bath & Beyond shares neutral with a $20 price
target, up from $13.
“While we are impressed by the progress made, clearly the
environment is helping with many of Bed Bath & Beyond’s key categories,”
wrote JPMorgan analysts in a note. “This suggests ongoing share loss and there
remains a lot of work to fix the company’s operating foundation while the
COVID-induced nesting lap looms. As such, we remain neutral.”
JPMorgan moved its price target to $21 from $10.
Prior to the earnings announcement, retailers across the home design, home goods, and home improvement space were experiencing high demand from consumers who are spending more time in their houses due to the pandemic.
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RH
RH,
was upgraded last week on analyst expectation that high-end home investment would benefit the retailer.
And rivals Lowe’s Cos.
LOW,
and Home Depot Inc.
HD,
have been hot as more consumers tackle home projects.
“We keep a sell
[stock rating] on the view that August quarter’s beats are reflective of low-hanging
fruit from unprecedented stimulus and tailwinds from COVID-19 cocooning (which
has temporarily shifted wallet share to home) and make Bed Bath & Beyond’s
transformation appear more robust than reality,” wrote Camilla Yanushevsky for
CFRA.
“Recent efforts
to improve fulfillment (e.g. Shipt; Instacart) are commendable, but the company
still lacks distinctive positioning.”
CFRA’s price target on Bed Bath & Beyond was moved to $8
from $3.
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Wedbush analysts are far more upbeat, calling out gross margin benefits from fewer markdowns, the recent launch of buy-online-pickup-in-store and other same-day services, the “impressive” $750 million in cash flow, and more.
“Most importantly, many of the underlying drivers of these
results should persist in the near-term, with easy comparisons providing
additional support, while drivers of much stronger profit in the medium term
are becoming clearer,” analysts led by Seth Basham wrote.
“As investors better understand the potential of this
merchandising-led transformation and the company continues to execute on its
plans under CEO Mark Tritton, we expect further share price gains.”
Wedbush rates bed Bath & beyond shares outperform with a
$25 price target, up from $18.
Raymond James also raised its price target to $22 from $16.
Analysts rate Bed Bath & Beyond stock strong buy.
Bed Bath & Beyond shares have rallied 18.4% for the year to date while the S&P 500 index
SPX,
is up 4.5% for the period.
