Next week is the analyst report for Bed Bath & Beyond (NASDAQ:BBBY), and based on what we've seen so far, it's starting to look like some pretty good news ahead for the company. A few weeks back, we called this a “turnaround play in action”, and given what we've seen since, that assessment may be just right. Speaking here as someone who actually shops Bed Bath & Beyond on occasion—when you keep your house shut up all winter, their Wallflowers air fresheners really do perk up the room—it's good to see that the retail malaise that's hit just about all over may be passing this outfit by.
An Improving Analyst Pool
The good news is that the company has actually picked up some changes in analyst perspective recently, and the changes are for the most part positive. Robert W. Baird upgraded its analysis on the company from “neutral” to “outperform,” and with it, raised the price target from its previous $13 per share to $20, which is a wonderful bit of upside potential given that the stock is trading at $13.70 as of this writing.
That wasn't the only recent shot in the arm the company got, either; Raymond James, that same day, came out with a reiterated “buy” rating, and reports suggest his price target is at $16. Back in August, Wedbush maintained its “outperform” rating, which suggests some positive developments likely to come.
The overall analyst pool, however, seems to be a bit at odds about just what kind of developments to expect from the company going forward. Right now, with 16 analysts covering the stock, three have “sell” ratings on it, seven are holding steady at “hold”, and six are at “buy”, which means the consensus view is hold leaning toward buy.
However, the changes over time are a bit telling in their own right. 90 days ago, there were four sells, eight holds, four buys, and one strong buy. 30 days ago, meanwhile, one sell ducked out, as did one hold, while the buy and strong buy ratings held fast. Now, we've lost the strong buy but added two buys. The consensus rating has not held steady for any one examined period in the last 180 days. Given that the stock is trading in the $13 - $14 range, and the current consensus price target is $11.30, that's not exactly the greatest news either.
Responding to Conditions
Back on Monday, we heard that 63 Bed Bath & Beyond locations were set to close by the end of this year, which was a response to conditions brought about by the coronavirus and the government-mandated closures that followed. This is just the start, though, as the company noted plans to close 200 stores before it was all said and done. With 955 Bed Bath & Beyond stores out there, that's a pretty healthy batch of store closings, but since the company is doing this to try and smooth out its operations and get its financial house in order, it can be forgiven; better 200 stores than all 955.
But here's the part that should get you interested. Sure, huge numbers of store closures aren't exactly a great sign, but there's something to be said for thinning out redundancies, and certainly, there are enough physical stores to make sure there's one somewhere around you. Moreover, Bed Bath and Beyond has put a lot of work and resources into upgrading its various sales channels; even if there isn't a store open immediately in your area, you'll still be able to get the products fairly easily by way of improved online shopping, which was the saving grace of many retailers during the earliest days of the pandemic.
Home is Still Where You Hang Your Hat
Regardless of what the analysts think, though that's certainly an important part of the package, there's one factor that's still clearly working in Bed Bath and Beyond's favor. People are increasingly staying home. Whether out of healthy concern, outright fear, or government mandate, home is where the heart is for a lot of people out there, and it's not surprising that they're retooling home to reflect this condition.
Whether it's new furniture, new rooms, or just a new odor, people are picking up new augmentations to their homes now that they're spending so much more time in them. That represents big changes coming for a society that was built on mobility and expansion, but with conditions like these, it's no surprise that home builders and home improvementcompanies, including Bed Bath & Beyond, stand a chance of doing well going forward.
