KeyBanc Downgrades Bed Bath & Beyond On Valuation, Competition

Bed Bath & Beyond Inc.’s BBBY stock valuation seems too high, according to KeyBanc Capital Markets, after the 99% appreciation in shares year to date, versus a 1% decline in the S&P 500.

The Bed Bath & Beyond Analyst: Bradley Thomas downgrades Bed Bath & Beyond's stock from Sector Weight to Underweight, while establishing a price target of $24.

The Bed Bath & Beyond Thesis: The company has been underperforming amid stiff competition in the home furnishings industry, Thomas said in the note.

“This year, BBBY continued to underperform peers, as the Company only saw comp growth of 5.5% and 2.4% in 2Q20 and 3Q20, respectively, during arguably the best backdrop we have seen for the industry in 20 years of following Home Furnishings. While new management is working diligently to improve the merchandising and marketing strategy, we expect competition to remain intense,” he wrote.

“To be clear, we think highly of CEO Mark Tritton and his team and their turnaround plan,” the analyst said. He noted, however, that successful retail turnarounds “are exceedingly rare.”

BBBY Price Action: Shares of Bed Bath & Beyond had declined by 15% to $29.72 on Monday.

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