Oppenheimer Cautions Clients to Stay on the Sidelines on Bed Bath & Beyond Inc. (BBBY)

Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares are tumbling nearly 12% in Friday's trading session, after the retail chain released its first-quarter earnings report that failed to live up to Wall Street's expectations. Earnings per share declined sharply to $0.53 from $0.80 in the prior year and fell well below a Street estimate of $0.66. In addition, BBBY reported first-quarter revenue of $2.74 billion, flat year over year and $50 million below the average analyst estimate.

Oppenheimer analyst Brian Nagel commented, "We view the weaker than expected Q1 (May) results that BBBY announced as another indication that the once dominant retail chain continues to struggle mightily amid a shifting sector landscape. [...] As we have written in the past, we remain optimistic that BBBY will eventually successfully tweak its model, so as to compete more effectively in an omni-channel world. The pace of investment at the company has stepped up lately. Clear signals of success are, however, scarce. Our advice for clients remains to stay on the sidelines and not get lulled into a seemingly washedout valuation."

Nagel is reducing his estimates to reflect the reported results and to reflect his expectations for continued comp softness through year-end. The analysts' FY17 (Feb. 2018) EPS estimate goes to $4.18 from $4.35 previously, and compares with a Street figure of $4.30. Nagel's FY18 (Feb. 2019) earnings forecast goes to $4.12 from $4.30 and is below a current consensus $4.30. The analyst reiterates a Perform rating on Bed Bath & Beyond shares.

According to TipRanks.com, which measures analysts' and bloggers' success rate based on how their calls perform, analyst Brian Nagel has a yearly average return of -0.3% and a 46% success rate. Nagel has a -13.7% average return when recommending BBBY, and is ranked #3362 out of 4583 analysts.

Out of the 17 analysts polled in the past 12 months, 12 rate Bed Bath & Beyond Inc. stock a Hold, while 5 rate the stock a Sell. With a return potential of 31.1%, the stock's consensus target price stands at $38.67.

 

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