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Bed Bath & Beyond Stock Sinks Due to Weak Q1 Results

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Bed Bath & Beyond (NASDAQ:BBBY) stock fell 9.7% in pre-market trading at 9:12 AM ET today. The home goods retailer posted its earnings for the first quarter of fiscal 2020, which ended May 30, after the markets closed on Wednesday. Bed Bath & Beyond reported lower-than-expected results in the first quarter. The company’s first-quarter top and bottom lines weren’t impressive.

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Bed Bath & Beyond’s earnings results for Q1

In the first quarter, Bed Bath & Beyond reported an adjusted EPS of -$1.96 compared to $0.12 in the first quarter of fiscal 2019. The earnings missed analysts’ consensus expectation of -$1.22 per share. Bed Bath & Beyond generated sales of $1.3 billion—a reduction of 49.2% from the first quarter of fiscal 2019. The company missed analysts’ consensus sales expectation of $1.4 billion.

In the first-quarter earnings release, Bed Bath & Beyond CEO Mark Tritton said, “The impact of the COVID-19 situation was felt across our business during our fiscal first quarter, including loss of sales due to temporary store closures and margin pressure from the substantial channel shift to digital.” 

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Tritton also said, “From the beginning of this crisis, we have taken measured, purposeful steps to help keep our people safe and our customers serviced, and we are proud of the way our teams have navigated this unprecedented challenge with speed and agility. At the same time, our actions to strengthen our financial position and liquidity are enhancing our flexibility and capacity to invest and rebuild our business for long-term success.”  

Wall Street analysts expect Bed Bath & Beyond to report an adjusted EPS of -$0.41 on revenue of $2.4 billion in the second quarter. Analysts also expect the company’s revenues to fall by 17.5% YoY (year-over-year) in fiscal 2020 to $9.2 billion. The sales could rise by 6.1% YoY in fiscal 2021 to $9.8 billion. Meanwhile, the adjusted earnings will likely decline from $0.46 per share in fiscal 2019 to -$2.24 per share in fiscal 2020. Analysts expect an adjusted EPS of -$0.38 in fiscal 2021.

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Analysts’ recommendations and target price

Among the 19 analysts tracking Bed Bath & Beyond stock, four recommend a “buy,” 11 recommend a “hold,” and four recommend a “sell.” Wall Street analysts have a 12-month target price of $10.00 for the stock. Overall, the target price implies a downside potential of 3.9% compared to the stock’s closing price of $10.41 on Wednesday. The consensus target price for the stock has risen from $6.96 in June—a growth of 43.7%.

Many analysts changed their target prices for Bed Bath & Beyond stock after its first-quarter earnings report.

  • Wedbush increased its target price from $12 to $14.
  • Raymond James decreased its target price from $13 to $12.
  • Jefferies increased its target price from $5.50 to $9.
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Stock returns

Bed Bath & Beyond stock rose 1.7% on Wednesday and ended the day at $10.41. At this closing price, the company’s market cap is $1.3 billion. Notably, the stock is trading 41.5% below its 52-week high of $17.79 and 203.5% above its 52-week low of $3.43. So far, the stock has declined about 39.8% year-to-date.

Based on the closing price on Wednesday, Bed Bath & Beyond stock was trading 6.1% above its 20-day moving average of $9.81. The stock is also trading 29.3% above its 50-day moving average of $8.05 and 39.0% above its 100-day moving average of $7.49.

Bed Bath & Beyond stock has an upper Bollinger Band level of $11.66, while its lower Bollinger Band level is $7.83. On Wednesday, the stock closed near its middle Bollinger Band level of $9.74, which suggests that it isn’t overbought or oversold.

On Wednesday, the Dow Jones Industrial Average increased by 177 points or 0.68%. The S&P 500 and the Nasdaq Composite rose by 0.78% and 1.44%, respectively.

Read Will the US Stock Market Crash in the Second Half of 2020? to learn more.

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