Bed Bath & Beyond Analyst Drops Bear Thesis On Retailer's Improved Outlook

Bed Bath & Beyond Inc. BBBY has strengthened its balance sheet and its near-term prospects have improved, according to Morgan Stanley.

The Bed Bath & Beyond Analyst: Simeon Gutman upgraded Bed Bath & Beyond from Underweight to Equal-Weight and raised the price target from $6 to $24.

The Bed Bath & Beyond Takeaways: The outlook for Bed Bath & Beyond’s near- to medium-term earnings has improved, given the strong home furnishings environment and the company’s aggressive cost cutting initiatives, Gutman said in the upgrade note.

The analyst raised Morgan Stanley's EBITDA estimates for 2021 and 2022 from $305 million to $460 million and from $240 million to $560 million, respectively.

Bed Bath & Beyond’s balance sheet improvements, from a net debt of around $500 million at the end of 2019 to a net cash position of around $250 million at the end of the second quarter, “give the company more time to execute its turnaround and are resulting in greater capital return to shareholders than we expected,” he said. 

Bed Bath & Beyond also plans to repurchase shares worth around $675 million over the next three years, Gutman said. 

BBBY Price Action: Shares of Bed Bath & Beyond were trading down 0.85% at $20.92 at last check Thursday.

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