Bed Bath & Beyond Stock Forecast November 2021 – Time to Buy BBBY Stock?

Bed Bath & Beyond (BBBY) stock was trading sharply higher in US price action today. The stock is however still less than half of the peaks that it hit in the first quarter amid the Reddit frenzy.

What’s the forecast for BBBY stock and is it a good buy after the sharp fall from the peaks?

Bed Bath & Beyond Stock recent developments

Yesterday, Bed Bath & Beyond made several key announcements. The company announced a partnership with Kroger. Under the partnership, Kroger customers would be able to shop BBBY products online through Kroger.com. The products would also be made available at select Kroger stores on a pilot basis next year.

The company announced that it would complete the $1 billion share buyback program with the fiscal year 2021, two years ahead of the original schedule. Corporate America has been repurchasing shares in a hurry and 2021 is expected to be a record year for buybacks. 2020 was a relatively slower year for buybacks as companies instead took a conservative approach amid the COVID-19 pandemic.

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BBBY announced business transformation

BBBY also announced a digital marketplace “to build on the Company’s existing authority in key Home & Baby categories.” It added, “The marketplace will expand its assortment of key products from a highly curated selection of third-party brand partners that will be seamlessly integrated into the Bed Bath & Beyond digital platform.”

The company also created a new position of chief growth officer which would be headed by Anu Gupta. Commenting on the role, Bed Bath & Beyond CEO Mark Tritton said “In her new role, Ms. Gupta will be working cross-functionally to continue managing the Company’s business transformation. She will be responsible for driving growth through the development and incubation of strategic partnerships and management of an increasingly expanding revenue ecosystem, while helping maintain the core business.”

Analysts are bearish on Bed Bath & Beyond stock.

While BBBY stock surged on the news, Wall Street analysts don’t seem too impressed. Loop Capital Markets analyst Anthony Chukumba downgraded BBY stock from a hold to sell pointing to the disconnect between the announcements and the price action.

“None of these developments materially alter our view BBBY has lost market share, mind share, and consumer relevance — which we believe is further confirmed by the continuation of the company’s weak early F3Q 2021 sales trends last month. In addition, we question how many consumers are going to purchase toasters, flatware, or Roombas from a supermarket’s website or stores,” said Chukumba.

While retail investors seem quite optimistic about the deal between Kroger and BBBY, Chukumba does not believe it’s a game-changer as many seem to believe.

Morgan Stanley on BBBY stock

Morgan Stanley also reiterated its underweight rating and $12 target price on Bed Bath & Beyond stock despite the announcements. “Sheer breadth of announcements – despite relatively benign implications – seemingly a big catalyst for a highly shorted stock with low expectations. … Extreme stock volatility may be back, but our [underweight] thesis on category reversion holds,” it said in its note.

Meanwhile, while BBBY stock went above $25 at one point in time in today’s price action, it was trading below $20 at the time of writing. It was nonetheless, trading almost 20% higher for the day.

Bed Bath & Beyond stock price forecast

Wall Street analysts look quite bearish on Bed Bath & Beyond stock. Of the 21 analysts covering BBBY stock, only three rate them as a buy while 10 rate them as a hold. The remaining eight analysts have a sell or equivalent rating on the stock.

BBBY has a median target price of $18 which is a 9% discount over current prices. We see something similar with fellow meme stocks as they trade well above their target prices. Amid the heightened volatility in meme stocks, many brokerages even stopped covering names like GameStop.

BBBY stock long term forecast

BBBY’s revenues have fallen in the last three fiscal years and analysts expect them to fall on a YoY basis in the current as well as the next fiscal year. It still remains to be seen how much the partnership with Kroger and the digital marketplace impact Bed Bath & Beyond’s earnings in the long term.

Should you buy Bed Bath & beyond stock?

Bed Bath & Beyond stock trades an NTM (next-12 months) PE multiple of 14.3x which is in line with its 10-year average multiples. However, a section of the market has been apprehensive about BBBY stock amid the meme stock status. However, if the company has successfully turnaround the business through the various initiatives that it is taking, the stock could deliver good returns in the medium to long term.

Bed Bath & Beyond stock is facing resistance at the 50-day SMA (simple moving average). While it crossed above the trendline in today’s trade, it could not hold on to the price levels. It also trades below the 200-day SMA. The stock would need to break above the 50-day SMA convincingly to signal a technical uptrend.

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