Bank of America upgraded Bed Bath & Beyond Inc.
Now that the recent short squeeze is largely over and stocks are pulling back to buy from neutral.
Bank of America cut its price target from $ 55 to $ 38.
Bed Bath & Beyond’s stock fell 5.4% on Thursday and is down more than 22% for the month to date.
Bed Bath & Beyond was trapped in GameStop Inc.
Just a few weeks ago, there was a brief squeeze frenzy that saw the stock gain up to 96% over four days.
See: It’s not just GameStop: here are some of the other heavily shortened stocks that are shooting higher
With the stock price falling and analysts free to focus on the health of the business again, analysts led by Curtis Nagle have taken a number of steps to prepare for growth in 2021.
These changes include: Closing more than 100 underperforming stores for a total of 200 closings by the end of the year; Sale of non-core assets, such as Cost plus world market;; and develop its digital skills.
“Bed Bath & Beyond has a number of growth initiatives and margin enhancers at the plants that we believe are not yet fully appreciated or believed,” said the analysts.
According to analysts, store remodeling, low-cost sourcing and more private label are on the way.
With the former Target Corp.
Managing Director Mark Tritton at the helm of Bed Bath & Beyond presented a transformation plan in the past few months. This will help Bed Bath & Beyond gain relevance and grow the business, says Bank of America.
“Unlike Gamestop, which saw a far more extreme rise and fall in its share price due to the brief press and high level of excitement for retail, we believe that a real fundamental turnaround is taking place at Bed Bath & Beyond,” analysts write.
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“Competition and reversing stock losses over the years will not be easy for Bed Bath & Beyond. However, there is no need to worry about the underlying market shifting to a place where it simply cannot develop a meaningful presence, as it does with Gamestop when the distribution of console games to the Xbox and PlayStation digital Networks is relocated. “
Bed Bath & Beyond shares rose 134% over the past year, outperforming the S&P 500 index
SPX, + 0.17%,
That is an increase of almost 16% for the period.