Build-A-Bear's 'Violent' Crash Unwarranted, Say These Experts

• The share price of Build-A-Bear Workshop, Inc BBW has declined 21.97 percent over the past one month, to hit a low of $14.12 on October 29.
• Piper Jaffray’s Stephanie S. Wissink has maintained an Overweight rating on the company, while lowering the price target from $25 to $22.
• Wissink believes that the “violent sell-off” in the stock on October 29 was unwarranted and largely driven by headlines rather than underlying fundamental trends.

Analyst Stephanie Wissink elaborated, “We are surprised that expectations for Q4 comps had extended as much as it appears; we had been looking for negative comps and continue to do so, given stiff comparisons.”

While expressing disappointment that the minor shift in marketing expenses for new product launches from Q4 to Q3 was not better “telegraphed,” Wissink stated that this fact alone led to part of the EPS miss for the quarter. “Given Q4 is a larger volume quarter, the benefit is less meaningful,” Wissink mentioned.

According to the Piper Jaffray report, the volatility in the shares were mostly due to the revenue and EPS miss, along with the negative comps witnessed Q4 to date.

“But underlying these headlines is a positive core comp offset by underperforming store closures; a shift in expenses into Q3 from Q4 that created a material EPS hit; and a negative Q4 sales comparable that should have been well known,” the report said.

Wissink also believes that multi-year drivers for Build-A-Bear Workshop remain unchanged, while multi-year trends still appear attractive.