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MemeMoney: Bed Bath & Beyond stock rockets each day before strategic update

Shares of Bed Bath & Beyond Inc. BBBY, -21.30% soared Monday, to buck broad-market weakness for another day, as meme-stock investors expressed optimism prior to the home goods retailers strategic update.

The stock rocketed 24.8% to close Monday at $13.35 while the S&P 500 index SPX, -0.78% slipped 0.7%. The stock raised another 10.6% in premarket trading on Tuesday.

On Friday, the stock had climbed 5.9% while the S&P 500 tumbled 3.4%, after the companys announcement that it could hold a conference ask Aug. 31 to provide a small business and strategic update.

The recent gains also followed a report in The Wall Street Journal having said that the retailer, which includes struggled with liquidity issues and slumping sales and margins, was nearing final terms for financing of near $400 million.

The stocks rally also helped provide some intraday support to other meme stocks. GameStop Corp. shares GME, -4.02%, which reversed a youthful loss of just as much as 1.8%, rose 1.9% on Monday, for their first gain in nine sessions. AMC Entertainment Holdings Inc.s stock AMC, -1.62% climbed 3.3%, paring a youthful decline of just as much as 2.8%.

Regardless of the Bed Bath & Beyonds strong two-day outperformance, most Wall Street analysts continued to warn investors never to choose the stock. Of the 18 analysts surveyed by FactSet, 12 were bearish and five were neutral, while only 1 was bullish. The common analyst price target for the stock was $3.70, which implied 72% downside from current levels.

FactSet

Wedbush analyst Seth Basham reiterated his underperform rating Monday, and kept his stock price target at $5.

Even though additional financing will probably bear a higher interest and include restrictive covenants, Basham said it will significantly decrease short-term liquidity risk and purchase the company additional time to handle its bloated inventories, cost structure and market share losses.

Basham reminded investors, however, that the financing doesnt change the truth that same-stores sales for the next quarter were trending down in the number of negative-20s percentages from the year ago, and he remains more comfortable with his forecast that operating margins will contract by around 12 percentage points. The business is projected to report second-quarter results in late September.

Even yet in a soft demand environment, BBBYs market share losses are untenable and create risk into 2023 if BBBY cannot improve its value proposition to customers, Basham wrote in an email to clients.

Significant operational and balance sheet challenges leave us cautious and we believe current risk/reward still remains disproportionately skewed to the downside, he added.

Bed Bath & Beyonds stock has plunged 40.9% since Aug. 17, where it peaked at $23.08 after a meme-stock resurgence sent it rocketing 359% in about fourteen days.

Dont miss: Bed Bath and Beyonds stock rockets nearly 30% on record volume, defying just one more analysts sell call.

Also read: Bed Bath & Beyonds stock snaps longest win streak in 15 years after Baird analyst suggests its time and energy to sell.

Still, the stock has rallied 44.6% in the last 90 days, while shares of AMC have rallied 6.8% and GameStop has shed 8.0%. The S&P 500 has lost 3.1% days gone by 90 days.

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