Wedbush upgrades Bed Bath & Beyond to Outperform, sees 62% upside potential
Wedbush analyst Seth Basham upgraded Bed Bath & Beyond to Outperform from Neutral and raised his price target for the shares to $16 from $14, which represents 62% upside potential. The retailer closed Friday up 9c to $9.89. Turning around declining retailers is a very difficult task, particularly amidst unfavorable secular trends and soft industry sales growth, but Bed Bath & Beyond has a "good chance of stabilization" in earnings over the next two years as its changes take hold, Basham tells investors in a research note. The company has a reconstituted board with "much-improved" governance, is resetting its cost structure, has a plan to reduce inventory by 35%, is rapidly refreshing stores to improve the shopping experience, has launched two private label brands, and is evaluating opportunities to leverage its store lease expiration cadence and sell noncore assets, explains the analyst. Further, Basham believes buy-side expectations are "very low."