UPDATE: Telsey Downgrades Bed Bath & Beyond (BBBY) to Underperform
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Telsey analyst Cristina Fernandez downgraded Bed Bath & Beyond (NASDAQ: BBBY) from Market Perform to Underperform with a price target of $15.00 (from $18.00).
The analyst comments "Downgrading to Underperform: We are downgrading our rating on BBBY to Underperform from Market Perform, as we view the stock's valuation as too high for a company with weakening financial performance as it faces a more challenging US consumer backdrop and ongoing supply chain challenges in 2022. Both the 4Q21 result and 1Q22 quarter-to-date sales trend came in well below expectations, resulting in a significant downward revision to our 2022-2023 sales and earnings estimates and further eroding confidence in the turnaround. While the management team has made progress on rolling out private label brands and remodeling stores, there have been execution missteps around marketing and promotions. In addition, Bed Bath & Beyond's legacy supply chain infrastructure limits the ability to move inventory around quickly and efficiently and offset the financial impact during a period of disruption. All in, the company's performance gap vs. home furnishings peers continues to widen. Our new 12-month price target is $15, down from $18, based on applying an EV/EBITDA multiple of ~6x to our revised 2023 EBITDA estimate of $352MM. We had previously valued the stock using ~14x our old 2023 EPS estimate of $1.25."
Shares of Bed Bath & Beyond closed at $17.76 yesterday.
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