Bed Bath & Beyond (BBBY) PT Drops to Single Digits as UBS Forecasts a Disaster

UBS analyst Michael Lasser lowered the price target on Bed Bath & Beyond (NASDAQ: BBBY) to $5.00 (from $12.00) on the belief that rapid inflation, falling consumer sentiment, demand pull-forward, and supply disruption drove significant pressure on BBBY's 1Q results.

The analyst reiterated a Sell rating, stating "SSS were down -20% QTD through mid-Apr and we believe its trends remained challenged for the remainder of 1Q (BBBY's 1Q spanned from March to May). WSM and RH both called out softening demand in May. Further, Census category sales were up 1.9% during BBBY's 1Q with its 3-year CAGR decelerating -260 bps sequentially in May. Notably, our forecast implies BBBY underperformed the category by -2,200 bps in 1Q (vs. -1,800 bps in the past 3 Qs). Overall, our conversations suggest a challenged 1Q and downward estimate revision is widely expected by the market. Still, we see significant uncertainty on the business's near and intermediate term earnings power in light of macro and other challenges. This will likely keep the stock under pressure for the foreseeable future, in our view.".

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