Bed Bath & Beyond to drop to $3 after Cohen sale, potential debt restructuring, Telsey Group says
Bed Bath & Beyond’s latest meme stock moment won’t last, according to Telsey Advisory Group. The name shot higher this month as retail traders piled in, resulting in unusually high volume and outsized moves. Bed Bath & Beyond is up more than 250% in August, but was down 42% in extended trading Friday morning after it was revealed investor Ryan Cohen completed the sale of his entire stake in the company this week. Telsey Advisory Group expects the stock to land at $3 per share, down nearly 84% from Thursday’s close of $18.55. The price drop should come after Cohen’s sale disclosure and Bed Bath & Beyond’s recent hiring of a law firm that specializes in corporate restructuring, as well as the fact that the company has been working with financial advisors and lenders on strengthening its balance sheet, Telsey Advisory Group wrote in a note Friday. Telsey also pointed to recent second-quarter earnings reports from other retailers that cater to Bed Bath & Beyond’s core consumer that show “a more challenging quarter, heightened promotional activity in the home to clear excess inventory, and trip consolidation toward discounters.” Those softer trends will make it difficult for Bed Bath & Beyond to attract customers to stores and clear excess inventory, analysts said. “Overall, Bed Bath’s weak financial position, uncertain economic environment, leadership overhaul, poor execution, and lack of clear strategy keep us cautious on the stock,” they said. –CNBC’s Michael Bloom contributed reporting.