Tuesday, June 05, 2007

Bed Bath & Beyond (NASDAQ:BBBY): GSCO cuts rating

- Goldman Sachs is taking their rating on Bed Bath & Beyond (NASDAQ:BBBY) to Neutral from Buy noting that while the co has historically been able to buck the trend, the convergence of a tough housing sector, aggressive competition, and rising oil prices has proven tough to overcome.While they continue to view Bed Bath and Beyond as a best in class home retailer, it is not immune to a challenging home backdrop. Management's commitment to the long-term health of the business is enabling it to post still positive comps as others flounder; however, EPS growth is slowing, and as a result, the firm sees no catalyst on the horizon.

GSCO has lowered their F07 and F08 EPS estimates to $2.35 and $2.65 from $2.44 and $2.82; as a result, price target moves down to $40 from $45, which equates to 15X F08 EPS estimates.

Notablecalls: This is exactly the type of stuff that will (at least initially) push the stock toward the lower end of my suggested range.

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