Wall Street Strategies Downgrades BJ's Wholesale (BJ) to Hold; Strong Probability of Deal Being Approved

Wall Street Strategies downgraded BJ's Wholesale (NYSE: BJ) from Buy to Hold.

WSS analyst, Brian Sozzi, said, "Almost exactly one year to the date that Leonard Green announced a 9.5% ownership stake in BJ’s Wholesale (BJ), catching a plodding retailer by surprise in the process, the saga to seal the fate of the company is a shareholder approval away from conclusion. BJ’s has agreed to be purchased jointly by Leonard Green and CVC Capital Partners for $2.8 billion in cash. The outcome on the purchase price is somewhat lowball in our view, valuing BJ’s at 6.9x estimated FY11 EBITDA or 6.48x next year’s EBITDA projection. These multiples are sufficiently below those of other retail transactions that have occurred since 2010 (which may cause an outcry by a few shareholders), likely a result of BJ’s concentrated store base (East Coast)."

For more ratings news on BJ's Wholesale click here and for the rating history of BJ's Wholesale click here.

Shares of BJ's Wholesale closed at $48.08 yesterday.

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