Loop Capital Markets' Anthony Chukumba upgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY)'s rating from Sell to Hold but with an unchanged $35 price target. The analyst's upgrade isn't based on the company's fundamentals and could come as a surprise to some based on the industry-wide woes.

In fact, the analyst is expecting "tepid" top-line growth in the coming year, along with a profitability margin deterioration. However, the stock's 10-percent decline since the start of 2017 and 16 percent loss over the past year implies a valuation currently "in line with our relatively bearish fundamental outlook."

Many investors may return to the retail sector if prospects improve. After all, the retail sector as a whole is experiencing a growth cycle dating back to 2008.

Some retailers are divesting non-core assets to better focus on their core competencies. Doing so could also unlock trapped value for investors and Bed Bath & Beyond does have its share of non-core assets.

Chukumba thinks at the very least the company can see some improvements if it were to integrate its various non-core stores and concepts with its core Bed Bath & Beyond store.

But for the time being, the analyst is sticking with a Neutral rating based as the stock's current valuation doesn't justify a Sell rating and much needs to be done to become incrementally more positive.