Yahoo Finance Bed Bath & Beyond stock is worth $2 per share, Goldman Sachs says
Bed Bath & Beyond is a company in turmoil with an uncertain future, most on Wall Street say.
While the company revealed drastic steps last week to raise cash ($500 million in debt + a potential 12 million share sale), cut expenses (close 150 stores/can 20% of the workforce), and alter the sales trajectory (promoted new leaders to Bed Bath & Beyond and buybuy BABY banners), Bed Bath is still seen as a market share loser that's running out of time.
The tragic suicide of its CFO Gustavo Arnal and a new lawsuit alleging a pump-and-dump scheme involving Arnal, prominent shareholder Ryan Cohen, and JP Morgan (Bed Bath & Beyond denies the allegations) has thrust the company into fresh tumult.
Goldman Sachs analyst Kate McShane says avoiding Bed Bath & Beyond's stock is the only wise course of action.
Here's what McShane had to say on Bed Bath & Beyond in a new note.
Price Target: $2
Rating: Sell (reiterated)
Stock price movement assumed: -72%
McShane's Call:
"In addition to addressing their liquidity issues through financing, cost cuts, and the closing of underperforming doors, Bed Bath & Beyonds announced a return to focus on national brands and a reduction in private label. We would note that while this is a step in the right direction, it is not dissimilar to what Bed Bath & Beyond was offering before the new management team came on board in 2019 and when the company was still comping negative compares consistently since FY16, indicating there may be more to the underperformance aside from merchandising."
The noted added that "we would add that Bed Bath & Beyond is experiencing negative same-store sales trends today on top of declines in FY21, differentiating the company from many industry peers which saw pandemic-related strength last year. We reiterate our Sell rating with a 12-month price target of $2 given weak 2Q comp trends, along with ongoing inventory issues and negative consumer sentiment."
Bed Bath & Beyond's brutal sales trend, visually:
How McShane is modeling BBBY's future financials:
"We are lowering our FY22 adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] estimate to ($326 million) from ($226 million) due largely to expectations for continued lower same-store sales with softening demand trends across the home furnishings industry, and ongoing pressure through the second half, despite sequential improvement. Additionally, we are decreasing our FY2023/2024 adjusted EBITDA estimates to $2 million/$105 million, respectively. We also note that we are not baking in additional shares for a potential at-the-market offering program at this time."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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