Bed Bath & Beyond Rallies 35% On Q2 Results: 3 Analyst Takes On The Print

Specialty retailer Bed Bath & Beyond Inc. BBBY may have caught some investors off-guard by reporting a top-and-bottom-line beat in its second quarter. 

Are Wall Street analysts just as bullish?

The Bed Bath & Beyond Analysts: Raymond James analyst Bobby Griffin maintains a Strong Buy rating on Bed Bath & Beyond with a price target lifted from $16 to $22.

KeyBanc Capital Markets analyst Bradley Thomas maintains a Sector Weight rating. 

Baird analyst Peter Benedict maintains an Outperform rating with a price target lifted from $20 to $25.

RayJay Sees Upside Potential For Retailer: Bed Bath & Beyond delivered to investors a comparable sales, non-GAAP EPS and adjusted EBITDA beat along with notable strength in digital and year-over-year gross margin expansion, Griffin said in a note.

The retailer also deserves credit for new customer service investments, including curbside pickup and online purchasing with in-store pickup, the analyst said. 

Bed Bath & Beyond's recent momentum looks to be sustainable, as the company continues to rationalize the store and lower costs, he said. 

Management is likely to discuss long-term initiatives like private label expansion and asset sales at an investor presentation this month, Griffin said.

The risk-reward profile on Bed Bath & Beyond's stock remains positive as ongoing turnaround initiatives and $2.2 billion in available liquidity could generate further upside in the stock, the analyst wrote.

KeyBanc Says Competitive Landscape Intense: The second-quarter report brought several positive takeaways, including positive comps in each month and sales growth in July and August, Thomas said in a note.

Bed Bath & Beyond said it saw positive comp growth in September, and buy-online, pick-up in-store trends accelerated into the new quarter, the analyst said. 

While Bed Bath & Beyond has multiple catalysts at its disposal to drive shareholder value, the competitive environment remains intense, and "significant work" is still required to reposition the company to remain viable over the longer-term, according to KeyBanc. 

Baird Says Bed Bath & Beyond's Q2 A 'Wake-Up Call': Bed Bath & Beyond's report is a "wake-up call" to investors who have become accustomed to disappointing performance, Benedict said in a note. The business transformation is in the very early stages, and investors should expect "significant" profit improvement of more than $800 million in EBITDA by fiscal 2023, the analyst said. 

While the longer-term recovery story is "far from certain," the profit improvement opportunity is "hard to ignore," he said, adding that management has plenty of cash at its disposal to invest in strategic initiatives. 

BBBY Price Action: Shares of Bed Bath & Beyond were trading higher by 10.11% to $20.64 at last check Friday.

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