Goldman Sachs on Bed Bath & Beyond (BBBY): 'sizable miss to our expectations', Says of Co Bonds 'We expect the market reaction to be quite negative'
Goldman Sachs analyst Kate McShane reiterated a Sell rating and $14.00 price target on Bed Bath & Beyond (NASDAQ: BBBY).
The analyst comments "BBBY reported 4Q21 adj. EPS of ($0.92), much below Consensus (Reuters) of $0.03, with a comp decline of 12%, vs GS/ Consensus estimates of -8%/-9%. The Bed, Bath & Beyond banner witnessed a comp decline of 15%, while there was growth of low single digits for the buybuy Baby banner compared to mid teen growth for the banner in 3Q21. Management attributes weak performance to Omicron variant and geopolitical disturbances that weighed on consumer confidence along with lack of inventory availability which has carried into early part of fiscal 2022 as in-transit/ held at port levels remain abnormally high for the company (~$175mn impact to 4Q sales). BBBY expects sequential improvement to occur in 2H22 versus 1H22 as the supply chain conditions potentially normalize with modest expansion in gross margins during 2H22. On the adj. SG&A front, the dollar expense is expected to remain flat vs last year as optimization plans offset inflationary headwinds."
Further on the credit paper end of things, analyst Jenna Giannelli comments "Bed Bath & Beyond reported a sizable miss to our expectations, as sales were in line but gross margin and EBITDA were impacted by notably higher supply chain, freight and inflationary pressures beyond the company's original expectations. Trends at buybuyBaby remained positive but slowed somewhat sequentially, while sales at Bed Bath & Beyond banner continued to underperform and were also hurt by lack of product availability. Detailed guidance was not provided for the year, and is suggestive of continued pressures in the 1H22 (1Q to date EBITDA is still trending negative). We expect the market reaction to be quite negative, but note the already weak performance in the bonds of late."
Giannelli remains Outperform on the bonds due to already weak performance.
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 $17.97 yesterday.