FBR Capital says they see more "headwinds than tailwinds" in regard to Bed Bath and Beyond (NASDAQ:BBBY), and see EPS as very moderate going forward.
FBR said, "BBBY's P&L faces more headwinds than tailwinds, in our view, and this sets up the stock relatively poorly heading into the 3Q10E print next week. This is given an NTM P/E valuation (16x) that is currently at a 21% premium to that of department store Kohl's (NYSE:KSS), as an example (13.2x), when BBBY's past premium has been more like 10%. This holiday season will complete the secondary anniversary of the liquidation of former competitor Linens N Things, which was technically completed by the end of November 2008. This fact, coupled with the potential for other pressures, such as cost inflation in 2011E, keeps us cautious, as the company faces more difficult comparisons across all facets of its P&L...For 2010, we estimate EPS of $2.80 (the Street is at $2.80). For 2011, we estimate $3.09, to reflect a 10% EPS growth rate, which we view as generous (the Street is at $3.16)."
FBR Capital maintains an "Underperform" rating on Bed Bath and Beyond, which was trading at $47.97, up $0.20, or 0.42 percent, as of 12:15 PM EST. FBR has a price target on them of $40.
Friday, December 17, 2010
Bed Bath and Beyond (NASDAQ:BBBY) Woes to Continue says FBR
Labels:
Bed Bath and Beyond,
FBR Capital
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