Wedbush Cuts PT on Bed Bath & Beyond (BBBY) Following 3Q Preannouncement

Wedbush maintained a Neutral rating on Bed Bath & Beyond (NASDAQ: BBBY), and cut the price target to $48.00 (from $62.00), following a lower than expected 3Q preannouncement. BBBY missed the low end of comp guidance by 140 bps, but also sees EPS falling 5% below the low end of prior guidance. That points to a significant additional margin pressure of ~30 bps, suggesting additional pressure from coupons/discounting that produced results falling short of plan.

Analyst Seth Basham commented, "BBBY preannounced sharply lower than expected 3Q15 results yesterday AMC, the company’s 8th miss on comps and/or EPS in the past 10 quarters. In line with our sector view, BBBY is not immune to rapid secular change occurring in home retail, with consumers shifting their shopping from stores to digital channels and leading BBBY’s market share losses to accelerate as we show inside. Indeed, the home category is the fastest growing online retail sales category this holiday season, according to comScore. With a high fixed cost base in its stores, and heavy omnichannel investments, this shift poses significant challenges for BBBY and most other brick and mortar home furnishings retailers. Price focus is the other key theme in this sector, both online and off, giving the upper hand to retailers such as Wayfair and Home Goods. While less favorable weather may have exacerbated recent pressures, we believe that the secular trends will persist, putting estimates at risk for 4Q15 and beyond. That leads us to reduce estimates, lower our target price and remain Neutral on BBBY."

For an analyst ratings summary and ratings history on Bed Bath & Beyond click here. For more ratings news on Bed Bath & Beyond click here.

Shares of Bed Bath & Beyond closed at $51.32 yesterday.

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