Bed Bath & Beyond Stock Upgraded Ahead of Second-Quarter Earnings

A Wedbush analyst upgraded the stock and raised its price target.

Shares of Bed Bath & Beyond are up more than 5% on Monday morning after the stock was upgraded by Wedbush from neutral to outperform. This is a bit of much-needed good news for the company, which is set to release its second-quarter earnings this Wednesday. 

And according to Wedbush analyst Seth Basham, investors shouldn’t discount Bed Bath & Beyond just yet. Basham said he believes the company will be able to stabilize its earnings in the coming years.

So is Bed Bath & Beyond a lost cause or is there a comeback story for the stock? Here are a few things you need to know. 

Bed Bath & Beyond Struggles to Remain Competitive 

At one point, Bed Bath & Beyond was one of the biggest retailers for home goods. But over the past five years, the company faced increased competition from companies like Amazon and Target. The company’s sales and in-store traffic declined over the past five years. 

This week, investors are expecting Bed Bath & Beyond to report adjusted earnings of 29 cents per share and $2.77 billion in revenue. Even if the company reaches these figures, both are down more than 5% from where the company was a year earlier. 

The Company Has a Rebuilding Plan

Bed Bath and Beyond’s comparable sales were down 7% during the previous quarter. This means the company’s sales have declined for the past three consecutive quarters. But according to interim CEO Mary Winston, the company has a plan to turn things around.

The company will close all of its underperforming stores, cut costs substantially, and reduce its hefty inventory load. But the company is most focused on bringing traffic back to its stores. On Wednesday, investors will be looking for signs that this is starting to happen.

Expectations Are Low for Bed Bath & Beyond

Hopefully, the company will deliver good news this Wednesday. But heading into the earnings report, expectations couldn’t be much lower. Bed Bath & Beyond hasn’t demonstrated that it has the strategy or vision to be able to compete with companies like Amazon.  

Ultimately, most analysts take a wait and see approach when it comes to the company. Of the 12 analysts currently reviewing the stock, eight give it a hold rating. However, the average price target is $14.50, which represents an upside of more than 38%. This could be a sign that Wall Street believes a comeback story is possible.