Bed Bath & Beyond Analyst Says Pullback To $2 Likely, Trends At Retailer Remain 'Challenged'

A stratospheric climb saw Bed Bath & Beyond, Inc. BBBY stock jump from $9.79 on Aug. 9 to $23.08 in about six sessions.

Bed Bath & Beyond Rally Stalls: After a six-session winning streak and a 135% jump, the wheels fell off the rally, with the stock sliding by over 18% in after-hours trading on Wednesday.

The trigger was a Form 144 filing by activist investor Ryan Cohen’s RC Ventures, which suggested the firm is planning to sell 7.78 million common shares and 16,701 call options to buy 1.67 million shares.

Cohen’s venture picked up nearly a 10% stake in the retailer in early March and increased it to 11.82% by late March. Cohen had urged then-CEO Mark Tritton to make changes at the company to stem market share losses and mitigate supply-chain issues.

Read also: Jim Cramer Bashes Bed Bath & Beyond: How He Says Retailer Could 'Save Themselves,' But Would 'Rather Sink The Ship'

KeyBanc Firmly Recommends Selling: Commenting on the recent developments, KeyBanc Capital Markets analyst Bradley Thomas noted that trading activity in Bed Bath & Beyond shares remained very unusual. He noted the shares were up about 4.6 times since July 29, outperforming the 3.5% gain for the S&P 500 Index during the same period.

“From a fundamental perspective standpoint, we believe trends at BBBY remain challenged,” the analyst said, citing KeyBanc’s fieldwork as well the firm’s proprietary Key First-Look and Geolocation data.

Thomas continues to expect significantly negative EBITDA, earnings per share and free cash flow for the company in 2022.

KeyBanc maintained a Sell rating and $2 price target on Bed Bath & Beyond, with the price target suggesting 91% downside.

In premarket trading on Thursday, Bed Bath & Beyond shares were slipping 12.95% to $20.09, according to Benzinga Pro data.