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Bed Bath & Beyond shares rise on upgrade

NEW YORK (AP) -- Shares of Bed Bath & Beyond Inc. rose on Thursday, after an analyst said the home goods retailer is poised to grow because of strong management and the slowly improving housing market.

THE SPARK: Oppenheimer analyst Brian Nagel raised his rating of Bed Bath & Beyond to "Outperform" from "Perform," saying recent shortcomings in sales and earnings were due to temporary issues and stepped up investments internally, rather than any structural problems.

THE BIG PICTURE: Bed Bath & Beyond and other home-related retailers have suffered during the prolonged housing slump, as people pulled back from spending money on their homes. But now there are signs the housing market is improving. A U.S. government report showed that last year was the best year for U.S. home sales since 2007 and analysts expect further improvement this year.

THE ANALYSIS: Nagel believes that Bed Bath & Beyond is one of the best run companies in its sector. He said that sales have been languishing lately, but that's due to waning demand for Green Mountain Coffee Roasters coffeemakers and other products and Best Buy has upcoming product opportunities related to its recent acquisition of home goods purveyor Cost Plus. The housing market's gradual return should also help Best Buy's revenue and earnings "rebound meaningfully" in coming quarters, he added.

Last month, the Union, N.J.-based chain, which operates more than 1,400 stores in North America, posted a nearly 2 percent gain in third-quarter net income, but its forecast for the current quarter fell shy of Wall Street's expectations.

SHARE ACTION: Shares rose $2.50, or 4.4 percent, to $59.02 in afternoon trading. The stock is still closer to the low end of its 52-week trading range of $54.33 to $75.84.