Bank Of America: Bed Bath & Beyond EPS Growth Solely From Buybacks

Bed Bath & Beyond Inc. (NASDAQ: BBBY)'s share buybacks are the company's sole source of earnings growth and are likely to diminish going forward, an analyst said Thursday.Bank of America's Denise Chai reiterated her Underperform rating on retailer and said online competition and the company's investments in e-commerce infrastructure and sales initiatives will pressure profits.The company met fourth-quarter earnings expectations late Wednesday, but offered a disappointing outlook. Its shares were off more than 6 percent recently at $72.87.The company's per-share earnings growth of 12.5 percent in the recent fourth quarter was buyback driven, with net earnings declining 3.7 percent, according to Chai, who maintained a $55 target.Analysts on average maintain a $78.58 target and a Hold rating on Bed Bath & Beyond, according to FactSet.Given an expected decline in free cash flow used to pay for share repurchases, Chai expects "less outsized returns" in future quarters.The company forecast full-year earnings-per-share growth of "flat to positive the mid single-digits" on Wednesday, which Chai said equals a decline in net profits of about 8 percent.The current year is "shaping up to be much like 2014" for the retailer, Chai said, with "heavy reinvestment in infrastructure and omni-channel capabilities."Chai shaved 0.5 percent from her 2016 revenue estimate to $12.2 billion and 1.7 percent from estimated 2016 earnings, to $5.21 a share.