Bed Bath & Beyond's Bankruptcy In The Coming Weeks 'Far More Likely': Analyst

Wedbush analyst Seth Basham reiterated an Underperform rating on the shares of Bed Bath & Beyond Inc BBBY and lowered the price target from $5 to $1.
The analyst said the company reported Q3 results with same store sales of -32% y/y, far below the analyst’s -20% y/y forecast and consensus’ -21% y/y.
The analyst said Bed Bath noted an acceleration in vendor payment terms and tighter consumer supplier credit terms despite the company’s efforts to shore-up its balance sheet and rebuild supplier confidence, hampering its ability to source product.
This has negative implications for Q4, where inventory typically turns into a large source of cash by the end of the year, the analyst added.
Also Read: Bed Bath & Beyond Options Traders Betting On Stock Surging Higher By This Much By Friday
BBBY has identified $80 million - $100 million in incremental corporate cost savings, including headcount reductions, as it continues to try and align its bloated cost structure with dire business trends and reassure its supplier, cited the analyst.
Against this backdrop, the analyst forecasts a $(743) million adjusted EBITDA loss for 2022.
The analyst thinks the company would run out of liquidity in 2023, making a restructuring scenario in bankruptcy in the coming weeks far more likely.
Also Read: Bed Bath & Beyond Stock Gained On M&A Speculation And Meme Stock Frenzy
The analyst noted that a bankruptcy filing would enable the company to more easily restructure this debt as well as cancel leases on unprofitable stores, removing a significant cash burden.
Price Action: BBBY shares are trading higher by 52.6% at $3.16 on the last check Wednesday.
Photo Via Wikimedia Commons

Market News and Data brought to you by Benzinga APIs

Get Our Top Trade Ideas Delivered Daily - 65% Off Now

Get Our Top Trade Ideas Delivered Daily - 65% Off Now

Bed Bath & Beyond's Bankruptcy In The Coming Weeks 'Far More Likely': Analyst

Comments