Going forward, housewares retailer Bed Bath & Beyond (NASDAQ:BBBY) and video game retailer GameStop (NYSE:GME) will have one less analyst involved in their coverage. Bank of America Securities has officially announced “no rating” status for both firms. The market seemed largely uninterested in Bank of America Securities' refusal to cover the companies, however, as GameStop slipped 1.2% in premarket trading while Bed Bath & Beyond was largely untouched. Bed Bath & Beyond slipped about 2.7% in this morning's session before staging a recovery above yesterday's close. Meanwhile, GameStop was down about 1.4%, but staged its own recovery as of this writing.
Bank of America Securities Is Keeping Mum...For Now.
Bank of America Securities' move to issue a “no rating” rating on both Bed Bath & Beyond and GameStop is regarded as an unusual move, but one with at least some motive behind it. The latest reports note that, essentially, Bank of America Securities has been watching the wild ebb and flow of Bed Bath & Beyond stock and notes there is little connection to fundamentals therein. Bed Bath & Beyond, Bank of America Securities noted, is largely trading on factors like retail investor interest—as derived from social media operations like Reddit's trading forum r/wallstreetbets—as well as trading volumes and short interest.
The decision to pull out of rating GameStop, meanwhile, was done for similar reasons, with Bank of American noting that GameStop was trading primarily on “non-fundamental factors.” While Bed Bath & Beyond hasn't gained quite as much as GameStop has on the “meme stock” effect, both companies are operating under the same basic set of principles of late.
However, don't let that count you out just yet; Bank of America Securities believes that, once the “meme stock” effect fades, Bed Bath & Beyond is likely to experience a long-term turnaround, bringing in between $850 million and $1 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2023.
What Do Other Financial Analysts Say About BBBY Stock and GME Stock?
While Bank of America Securities may have departed the field on Bed Bath & Beyond stock, there are still plenty of analysts staying in the fray. Right now, however, they're urging caution, with a “hold” consensus rating. That “hold” has been in place for the last two years, reports note, and then some.
In fact, the ratios comprising that hold have been fairly stable in their own right for the last year. A year ago, the company had three “buy” ratings, 10 “hold”, and four “sell” to its credit. Six months ago, that shifted to three “buy”, nine “hold” and four “sell.” Today, we're at three “buy”, nine “hold” and three “sell.” While there is a slight shift to the bullish side to consider, that shift took a year to take place. The ratio of “buy” to “hold” is still effectively one to three, and has been for the last year. It's getting more bullish, but slowly, and in incremental steps.
Bed Bath & Beyond's price target keeps to a very narrow range as well. Currently, the consensus average is $25.58, with a high of $38 and a low of $12. Bed Bath & Beyond currently sells at $32.21, suggesting at least some downside potential on hand.
Recent developments have also been comparatively slim here; the month of April saw six analysts make changes, with two—Morgan Stanley and JPMorgan Chase & Co—raising their price targets. Four—Loop Capital, KeyCorp, Wedbush and the Telsey Advisory Group—lowered their price targets in April. There was no activity recorded for the entire month of May.
GameStop stock, meanwhile, has a much more bearish stance. GameStop has a consensus rating of “sell” and has held that rating for the last two years, reports note. In fact, the ratios have been the same for the last year now: two “hold” ratings and five “sell” ratings.
As for the GameStop price target, it's nothing like the current share price. The current average is just $13.36 per share, with a high of $30 and a low of $3.50. With GameStop shares currently selling at $257.30, it's clear there is substantial downside potential for this stock.
The last real change, reports note, was back in January 2021 when Standpoint Research changed its “buy” to “hold”. That was one of just five analyst moves on the stock this year, with three analysts—Ascendiant Capital Markets, Credit Suisse and Wedbush—reiterating previous ratings and one, Telsey Advisory Group, lowering its price target from $33 to $30 per share.
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