UPDATE: UBS Downgrades Bed Bath & Beyond (BBBY) to Sell Following 73% YTD Surge
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UBS analyst Michael Lasser downgraded Bed Bath & Beyond (NASDAQ: BBBY) from Neutral to Sell with a price target of $20 amid the 73% YTD surge.
The analyst commented, "With BBBY shares up 73% YTD, our call is to take profits. The recent move has tilted the risk-reward to the downside. The shares will eventually face stiff resistance from 1) A turnaround that probably won't deliver linear progress. The challenges at BBBY are deep & will take time to fix. We believe the typical BBBY customer visits less than 5x per year. Thus, the retailer doesn't have the frequency to showcase changes it might make. Plus, it runs the risk that other retailers continue to siphon off these visits. 2) The headwind to the HF sector from demand pull forward. Roughly 2/3 of BBBY's sales are from items such as kitchen & tabletop, basic housewares and general home furnishings. Industry-wide sales of these goods will face pressure as consumers shift spending to areas like food away from home & travel; and 3) The valuation, w. BBBY trading at 25x cons. CY'21 EPS & 15x cons. CY'22 EPS ests, simply doesn't account for the risks."
Shares of Bed Bath & Beyond closed at $30.68 yesterday.
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