Up 101% in one month, Bed Bath & Beyond could double again, analyst says


The market response to Bed bath and beyond (NASDAQ: BBBY) fundamentally restructure by getting rid of non-core assets and focusing on its digital future, its share price has doubled.

The housewares retailer’s shares over the past 30 days have risen from around $ 12 to over $ 24, and now an analyst believes they may double again.

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Baird analyst Peter Benedict told investors in a research note that despite Bed Bath & Beyond’s meteoric rise, the bullish case remains weighed down by doubt. He believes, however, that if the retailer succeeds in meeting his targets, the stock could very well double in value again.

He argues that Bed Bath & Beyond has the potential to make significant profit gains as it has the financial means to support its ambitious transformation. In addition, it can do so while returning significant amounts of capital to shareholders.

Under the leadership of CEO Mark Tritton, the home goods store is once again focusing on its core businesses, which has made the retailer an enviable growth story before the previous management left it on tangents. In doing so, Bed Bath & Beyond ignored critical infrastructure investments it needed to make, such as strengthening its digital offerings.

While there has been a marked difference from where it was, Bed Bath & Beyond is still emerging from a very deep hole.

Despite a 101% jump in the stock over the past 30 days and a surge of more than 600% from its April lows, the retailer has yet to prove that its strategy will result in increased sales. Comparable store sales in the second quarter were up 6%, their first gain in four years, on the strength of digital sales, but store lineups were down 12% year-over-year.

This shows that Bed Bath & Beyond still has a long way to go.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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