History Says Bed Bath & Beyond Stock Could Move Higher

A shift in analyst sentiment could fuel additional gains for BBBY

Digital Content Manager
Mar 10, 2021 at 12:16 PM
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The shares of home goods retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY) are dipping today, down 4.7% at $28.40 at last check. However, the equity is fresh off a Jan. 27, six-year high of $53.90, and currently sports a mind-blowing 233.5% year-over-year lead. What's more, the stock's latest pullback has it near a historically bullish trendline, which could serve as a springboard for BBBY moving forward.

Specifically, Bed Bath & Beyond stock just came within one standard deviation of its 40-day moving average, after spending weeks above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred in the past three years. The security enjoyed a positive return one month later in 75% of those cases, averaging an impressive 26.2% gain for that period. From its current perch, a move of similar magnitude would put BBBY just over the $35 mark -- a bit closer to its January peak. 

BBBY 40 Day 2

Analysts are still bearish towards Bed Bath & Beyond stock, leaving plenty of room for upgrades and/or price-target hikes moving forward. Of the 11 in question, 10 carry a tepid "hold" or worse rating. Plus, the 12-month consensus target price of $27.65 is a 4.7% discount to current levels. 

And while short sellers are already hitting the exits, there is still plenty of pessimism left to be unwound, which could send shares even higher. Short interest fell 19.9% over the last two reporting periods, yet the 25.46 million shares sold short still make up 22.3% of the stock's available float.

Finally, BBY options are a bargain at the moment. The equity's Schaeffer's Volatility Index (SVI) of 108% sits higher than just 17% of all other readings in its annual range. This suggests options players are pricing in lower-than-usual volatility expectations right now.

 

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