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Bed Bath & Beyond (BBBY) $2B Buyback Already Baked In, Says Goldman Sachs

July 7, 2014 12:49 PM EDT
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Price: $0.08 --0%

Rating Summary:
    4 Buy, 17 Hold, 14 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Goldman Sachs maintained a Sell rating on Bed Bath & Beyond (NASDAQ: BBBY) with a price target of $61. Earlier Bed Bath & Beyond announced that its Board of Directors has authorized a new $2.0 billion share repurchase program. Analyst Matthew J. Fassler thinks this is already largely backed in.

"We have already modeled buybacks beyond the completion of the current authorization. BBBY has committed to $2.861 bn of buybacks by year-end 2016; we were previously at $2.550 bn. Lifting our total to $2.850 bn, with the increment coming in 2016, leads us to hike our 2016 estimate by $0.04 to $5.64, while maintaining 2014/2015 at $4.97/$5.25," said Fassler.

"Note that we continue to prefer some injection of dividends into capital allocation for mature companies with challenged earnings streams. BBBY would need to add leverage to launch a dividend or buy back more stock, a notion this 8-K suggests is feasible (i.e. “various financing alternatives.”) BBBY has never had debt, though it has the capacity to add some, with rent-adjusted-debt to EBITDAR of 1.9X, near the low end of our coverage," he added.

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 $59.35 yesterday.



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