Baird On Bed Bath & Beyond's Stock: 'Worth A Shot'

Retail executives face an uphill battle in succeeding in a turnaround plan but a bullish stance on Bed Bath & Beyond Inc. BBBY is "worth a shot," according to Baird.

The Analyst: Peter Benedict upgraded Bed Bath & Beyond's stock from Neutral to Outperform with a price target lifted from $13 to $20.

The Thesis: Bed Bath & Beyond CEO Mark Tritton deserves credit for overhauling the C-suite by bringing in omni-channel and business transformation experts, Benedict wrote in the note. Tritton is expected to explain his full turnaround around at an October investor meeting, but early indications favor a chance at overseeing a successful turnaround.

Related Link: Bed Bath & Beyond Reports Q1 Earnings Miss After Pandemic Store Closures

Meanwhile, early signs of "real change" are evident, including improvements over its private/owned brands, vendor renegotiation and data-driven assortment optimization. Consumers are also reacting well to a refreshed website experience, buy-online-pickup-in-store and curbside options. Renewed traction with customers could improve in 2021 and beyond from "meaningful" catalysts like store remodels.

Benedict said the company also proceeding with a cost savings program and potential asset sales that will help drive $335 million or more of profit improvement over the next two to three years.

Finally, more than 80% of analysts hold a neutral or bearish stance on Bed Bath & Beyond's stock while the market is assigning a minimal probability of success. This creates an "intriguing setup" and even if the company falls 50% short of its $800 million EBITDA target, the stock still has an upside potential of 50%

BBBY Price Action: Shares of Bed Bath & Beyond were trading higher by 5.7% at $14.12.