Why Bed Bath & Beyond Inc. Shares Slipped

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Bed Bath & Beyond (NASDAQ: BBBY  ) slipped about 1% today after Wedbush downgraded the home-merchandise retailer from outperform to neutral.

So what: Along with the downgrade, analyst Seth Basham lowered his price target to $66 (from $86), representing about 4% worth of downside to yesterday's close. So, while contrarians might be attracted to Bed Bath & Beyond's sharp pullback in 2014, Basham's bear call, which is based on his view of a slowing housing market, suggests that the upside remains limited. 

Now what: According to Wedbush, Bed Bath & Beyond's risk/reward trade-off is unfavorable at this point. "Based on our revised housing outlook, we believe BBBY comps may fall short of expectations for 2014 by ~50 bps, with the pressure mounting in the back half," noted Basham. "Outside of the macro, the fundamental outlook remains challenged and there is little visibility that internal changes will significantly improve trends in the near-term." Of course, with the stock now off about 15% from its 52-week highs and trading at a forward P/E of 12, those short-term concerns might be providing patient Fools with a solid long-term opportunity.

More compelling retail picks
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2866703, ~/Articles/ArticleHandler.aspx, 9/17/2014 7:55:06 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement