Why Analysts Favor a ‘Hold’ for BBBY ahead of 2Q17 Earnings
As of September 12, 2017, analysts are expecting Bed Bath & Beyond’s (BBBY) stock price to reach $32.32 in the next 12 months, which represents a return potential of 11.4%.
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The lower-than-expected EPS and negative SSSG (same-store sales growth) in 2Q17 could have compelled analysts to lower their 12-month target price. Before the announcement of 2Q17 earnings, analysts had forecasted a target price of $38.80.
The target prices and return potentials of BBBY’s peers are as follows:
- Williams-Sonoma (WSM): target price of $50.16 with a potential return of 2.0%
- Lowe’s Companies (LOW): target price of $84.84 with a return potential of 6.6%
- Home Depot (HD): target price of $170.54 with a return potential of 6.7%
Of the 24 analysts that follow BBBY, 4.2% are recommending a “buy,” 66.7% are recommending a “hold,” and 29.2% are favoring a “sell.” After BBBY’s weak 2Q17 earnings, many analysts downgraded the stock and lowered their target price. On June 23, 2017, Wedbush Securities cut its target price from $38 to $30, while Deutsche Bank lowered its target price from $36 to $31, and Barclays lowered its target price from $45 to $40.
BBBY’s stock price moves in tandem with analysts’ ratings. When analysts raise their estimates, BBBY stock rises, and vice versa. Currently, BBBY stock is lower than analysts’ target price. However, this does not mean an automatic “buy.” Investors should carefully analyze the various parameters discussed in our earlier articles before making any investment decisions.
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