Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Bed Bath & Beyond Shares Are Up 7% Monday Afternoon

By Daniel Miller - Nov 25, 2019 at 3:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bed Bath & Beyond receives another vote of confidence with a newly appointed CEO at the helm.

What happened

Shares of Bed Bath & Beyond ( BBBY -1.60% ), a home furnishing retailer with bed and bath accessories, among other products, are up over 7% early Monday afternoon after one Wall Street analyst gauged a company turnaround on the way.

So what

BBBY Chart

BBBY data by YCharts

As you can see in the graph above, it's been an up-and-down year for Bed Bath & Beyond (BBBY) and its shareholders, but there's clearly been some momentum behind the stock over the past quarter. The retailer's momentum got another boost today from analysts at Bank of America when they noted confidence in the newly appointed BBBY chief executive, Mark Tritton, to lead a company turnaround -- Bank of America has a $20 price target on the stock. "Under Mr. Tritton's leadership we believe there is a real shot of stabilizing sales through new brand and product development, tighter vendor partnerships and stronger store and online execution," wrote a team of BofA analysts led by Curtis Nagle, in a note to investors.

Candles stacked on one another, on a table top

Image source: Getty Images.

Now what

Tritton, previously chief merchant at Target Corporation, has his work cut out for him as BBBY stock has shed roughly 70% of its value over the past three years. Bank of America's analysts aren't the only people on Wall Street that believe BBBY is undervalued: In mid-October, analysts at KeyBanc slapped an $18 price target on the stock, believing the company could unlock value through "asset sales" -- which would likely include stores not under the Bed Bath & Beyond brand name -- and that plenty of negative sentiment is already baked in the stock price.

While Tritton's merchandising background appears to be a good fit for BBBY, the team will need to battle a number of challenges that include a string of negative comparable sales performances, contracting margins, dependence on less profitable coupons and deals, and finding the right balance of store-count and physical store size. At a time many retailers are facing challenges, the recent Wall Street optimism for BBBY is a breath of fresh air for investors who have watched the stock plunge to a forward price-to-earnings ratio of 6 times. However, don't expect the stock price to test those higher-price targets until the company logs consecutive quarters showing a turnaround is gaining traction.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
$17.86 (-1.60%) $0.29
Target Corporation Stock Quote
Target Corporation
$247.57 (0.84%) $2.07
Bank of America Corporation Stock Quote
Bank of America Corporation
$43.87 (-2.27%) $-1.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.