Does The Retail Stigma Hurting Barnes & Noble Unfairly Extend To Barnes & Noble Education Shares?

BWS Financial said in a note Monday the lack of Street coverage and stigma related to Barnes & Noble Education Inc (NYSE:BNED)’s former parent Barnes & Noble, Inc. (NYSE:BKS) being in the retail business has put a valuation gap the former. That said, the firm expects the gap to narrow in the coming quarters.

Underwhelming Stock Performance

Analyst Vahid Khorsand noted shares of Barnes & Noble Education have underperformed since the release of its fourth-quarter results. “The Company’s announced acquisition of MBS Books (‘MBS’) has been construed in several ways, yet the acquisition changes the dynamics of the business and the investment story at BNED,” the analyst said.

Positive Catalysts

BWS Financial believes improving consumer sentiment and a relatively strong college application season should serve as positive catalysts for the company. Data released last week showed consumer confidence soaring to its highest level in over 16 years.

MBS Acquisition: A Game Changer

“The acquisition of MBS is defensive as it helps BNED stay current with trends in the marketplace. The purchase also represents entry to new opportunities,” the firm said. This, according to the firm, is a game changer for its investment story.
BWS Financial rates the company’s shares a Strong Buy, with a $14 price target.

At the time of writing, Barnes & Noble Education shares were down 1.98 percent at $9.40.

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