Analyst Puzzled By Bed Bath & Beyond's Q4 Update

Bed Bath & Beyond Inc. BBBY Tuesday provided an update only two months into its fiscal fourth quarter.

The update was both disappointing and puzzling, as the company did not provide any details on the timing of asset sales or potential cost savings, according to Raymond James.

The Bed Bath & Beyond Analyst

Bobby Griffin maintained a Strong Buy rating on Bed Bath & Beyond, while reducing the price target from $17 to $14.

The Bed Bath & Beyond Thesis

The purpose of Bed Bath & Beyond’s latest update is unclear and there is lack of visibility into when the company’s margins and comparable sales will stabilize, Griffin said in the note.

He added, however, that the home furnishing retailer’s turnaround was not expected to be either quick or linear.

See Also: Bed Bath & Beyond Shares Tank 25% Over Bleak Q4 Outlook

Although the turnaround is taking longer than expected, there is unlikely to have been any change to the company’s potential asset sales, which continues to be a potential near-term catalyst, the analyst said.

Griffin further wrote, “While we expect some criticism for our recommendation, we want to hear what the long-term strategy is from new CEO Tritton and ultimately what assets will remain, before we fully judge the feasibility of the turnaround.” He added that the company’s balance sheet and dividend yield were “healthy enough for us to wait.”

BBBY Price Action

Shares of Bed Bath & Beyond were down more than 19% to $11.90 at time of publication.

Photo by Andrea Davis on Unsplash