What happened

Shares of retailer Bed Bath & Beyond (NASDAQ:BBBY) slumped on Friday following an analyst downgrade. The stock was down about 4.15% at 12:30 p.m. EST, after having been down as much as 7% earlier in the day.

So what

Analysts at JPMorgan lowered their rating on shares of Bed Bath & Beyond to "underweight" from "neutral." Increased competition in the home furnishing market, as well as overly optimistic estimates regarding the benefits of tax reform savings, led to the downgrade. JPMorgan also lowered its price target on the stock to $18.

A slumping stock chart.

Image source: Getty Images.

Bed Bath & Beyond has struggled over the past few years as retail has shifted increasingly online. Both gross and operating margins have been trending downward since 2012, the result of increased competition and the company's dependence on its ubiquitous "20% off" coupons. Bed Bath & Beyond produced $500 million of net income over the trailing-12-month period, down from $1.04 billion in fiscal 2013.

Shares of Bed Bath & Beyond shed 46% of their value in 2017. That $18 price target is 18% lower than the current stock price.

Now what

Bed Bath & Beyond won't report its fourth-quarter results until April 11, so investors won't have a good sense of how the retailer did last holiday season for a few more months. Retail sales overall were strong, so the company may benefit from a rising tide lifting all boats.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.