MMR

Bed Bath & Beyond Stock Set to Drop on New "Sell" Rating

BBBY stock is trading near a trendline with historically bearish implications

Feb 11, 2019 at 9:28 AM
facebook X logo linkedin


Loop Capital downgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY) to "sell" from "hold," and cut its price target to $12 from $13. The brokerage firm called BBBY stock's recent gains "unwarranted," and said the home goods retailer's 2019 fiscal guidance is "unrealistic." Further, Loop Capital noted, "BBBY shareholders are unlikely to be 'bailed out' by a leveraged buyout (LBO) or activist investment."

In reaction, BBBY stock is down 2.7% in electronic trading. Heading into today, the shares were up 47% from their Dec. 24 20-year low of $10.46, and closed Friday at $15.42. However, this rally has the security trading near its 160-day moving average.

Per data from Schaeffer's Senior Quantitative Rocky White, there have been eight times in the last three years BBBY has come within one standard deviation of this trendline after a lengthy stretch below it. This resulted in an average one-month loss of 7.8%, with three-quarters of the returns negative.

The brokerage bunch is already skeptical of Bed Bath & Beyond, with not one of the 14 analysts in coverage maintaining anything higher than a "hold" rating. Plus, the average 12-month price target of $13 is a discount to current trading levels.

Meanwhile, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.61 ranks in the 89th annual percentile, meaning short-term speculators are more put-heavy than usual toward BBBY. The February 10 and 15 puts are home to peak front-month open interest, with nearly 42,000 contracts collectively outstanding.

 

AI has exploded ever since ChatGPT set the world on fire near the end of 2022.

Numerous companies with connections to artificial intelligence have seen their stocks soar.

That includes Nvidia, the poster boy of AI.

Its stock has skyrocketed 716% since ChatGPT’s debut. But here’s the thing …

While everyone’s still counting their money from this first AI boom … Nvidia and countless others have moved on to the next stage.

That includes Big Tech, which is currently making a series of peculiar investments in a few strange companies. This has nothing to do with tech. At least on the surface …

Yet, these strange investments could be the early ripples of a massive wave …Without them, ChatGPT could stop operating … Amazon, Google, Microsoft and more could see profits drop drastically.

In fact, Elon Musk says these investments are critical when it comes to solving the number one problem facing AI.

Now, Silicon Valley legend Michael Robinson has identified two companies that could play a significant role in the solution.

Their stocks just may be the key to AI 2.0.

Find out more about these two companies today.
 (ad)