SunTrust Expecting Bed Bath & Beyond To Post In-Line Q4 Results

Bed Bath & Beyond Inc. BBBY is scheduled to announce its fourth quarter results after the market closes on Wednesday. SunTrust Robinson Humphrey shared a preview of the figures, reiterating a Neutral rating and $55.00 price target.

In a report issued Monday, SunTrust's David G. Magee and D. Mitch Van Zelfden are modeling an in-line performance for the quarter, with total comps up 1 percent, but believe “post holiday sales are likely more encouraging.”

The firm’s recent pricing study shows that Bed Bath & Beyond is “fairly competitive.” However, given the company’s exposure to sector disintermediation and a sluggish economy, SunTrust remains on the sidelines, assuming just one point of multiple expansion to 10 times 2017 EPS, still below the historical median.

For Wednesday’s call, SunTrust envisions EPS of $1.75, below the Street’s consensus of $1.80, mainly reflecting a more conservative gross margin estimate. The firm also expects a 1 perncet comp gain.

However, the analysts think fourth quarter “visibility is ‘reasonably’ good, given that the most recent commentary was issued after the holiday season...and other retailers noted that the general environment has ‘normalized’ after the promotional holiday selling season (BBBY has a February FYE).”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.