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.
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.
“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.