This Analyst Says Bed Bath & Beyond Has 'Many New Tools In The Basket'

Home goods retailer Bed Bath & Beyond Inc. BBBY has "many new tools in the basket" that position the home goods retailer to achieve its 2023 profit objectives, according to BofA Securities.

The Bed Bath & Beyond Analyst: Curtis Nagle upgraded Bed Bath & Beyond from Neutral to Buy with a price target lowered from $55 to $38.

The Bed Bath & Beyond Thesis: Bed Bath & Beyond's stock has fallen sharply from its 52-week high of $53.90 and investors should take advantage of the dip, Nagle wrote in the note. Led by a new management team, the company should show growth in 2021 and hits its 2023 target of $850 million to $1 billion.

Management also deserves credit for divesting its non-core assets that generated more than $600 million in cash and a commitment to continue closing underperforming stores. This puts the company in a strong enough position to both invest in growth initiatives and return capital to investors.

Related Link: 2 Analysts Downgrade Bed Bath & Beyond, Stock Still Pops 30%

The future of Bed Bath & Beyond stores will look different through remodels and a merchandising overhaul with a focus on higher-margin owned brands. The company expects this will translate to topline, earnings and new customer growth.

"The most consistent pushback from clients is BBBY's underperformance to peers and tough industry 2H21 compares, but BBBY has a slew of growth initiatives and margin boosters in the works that we do not believe are fully appreciated or believed yet," the analyst wrote.

BBBY Price Action: Shares of Bed Bath & Beyond hit a session high of $30.66 shortly after the bell, but traded lower by 4.6% to $27.67 at publication time.

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