Is Bed Bath & Beyond Worth Only $2 Per Share? Here's What 3 Analysts Are Saying

Retailer Bed Bath & Beyond Inc. BBBY reported first-quarter earnings and the departure of its CEO Mark Tritton on Wednesday. The departure prompted a snarky response from Ryan Cohen, who is a large shareholder in the company.

Here’s what analysts had to say about the company’s earnings and the CEO leaving.

The Bed Bath & Beyond Analysts: Morgan Stanley analyst Simeon Gutman had an Underweight rating and lowered the price target from $7 to $2.

Telsey Advisory Group analyst Cristina Fernandez had an Underperform rating and lowered the price target from $6 to $3.

KeyBanc Capital Markets analyst Bradley Thomas had an Underweight rating and lowered the price target from $5.50 to $2.

Related Link: 'It's Game Over': Loop Capital Analyst Warns That Bed Bath & Beyond's Days Are Limited 

The Analyst Takeaways: A transformation by Bed Bath & Beyond is not gaining traction according to Morgan Stanley's Gutman, who sees further downside in the stock.

“The situation is now more precarious as not only is revenue declining but balance sheet and cash flow health have deteriorated as well, and it’s going to be tough to properly execute a turnaround,” Gutman said.

The analyst points to businesses that see increased management turnover during transformations, which make execution more complicated.

“The big question for the stock is the value of buybuyBABY as it appears the market is ascribing little to no (or even negative) value for Bed Bath.”

BuybuyBABY sells clothing, gear and other items for use with infants and young children and is owned by Bed Bath & Beyond. 

Gutman thinks there could be a potential value of $500 million to $600 million for the buybuyBABY brand, greater than the company’s current market capitalization.

Telsey's Fernandez calls the first quarter from Bed Bath & Beyond disappointing with a miss of sales and earnings per share estimates.

“(Bed Bath & Beyond) continues to face a more challenging consumer backdrop, lower demand for its key product categories, wider market share losses, and supply chain disruption,” Fernandez said.

The analyst also highlighted the company announcement about the departure of CEO Mark Tritton and Chief Merchandising Officer Joe Hartsig.

The company reported June comparable sales down 20%, a sign of the second quarter also being weak.

KeyBanc's Thomas saw that the company had significant challenges with inventory and supply-chain issues as headwinds.

“Looking ahead, management remains committed to the potential sale of its buybuyBABY banner. Aside from this potential catalyst, we ultimately believe fundamentals point to a lower share price,” Thomas said.

BBBY Price Action: Bed Bath & Beyond shares are down 2.99% to $4.84 on Thursday.

Photo: Sundry Photography via Shutterstock