Bed Bath & Beyond (BBBY) PT Doubles to $6 but Morgan Stanley Sees Significant Downside Ahead

Morgan Stanley analyst Simeon Gutman doubled the price target on Bed Bath & Beyond (NASDAQ: BBBY) to $6.00 (from $3.00) but maintained an Underweight rating on the belief that the stock is pricing in a stronger recovery than the business looks on track to deliver, leaving the opportunity for downside in the coming quarters.

The analyst stated "We see significant (~35%) downside despite increasing our price target to $6.
We are raising our price target (to $6 from $3) to reflect a modestly higher multiple and lower net debt in 2021. Our 2020/2021 earnings estimates increase due to stronger consumer spending trends than we had anticipated when we last lowered our estimates in March (during the early stages of COVID-19), but our 2022 estimates fall due to the "run rate" impact of store closures affecting ~15%
of the current footprint within 3 years".

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