Wachovia downgraded Bed Bath & Beyond (BBBY ) to market perform from outperform.
Analyst John Baugh says despite the home-goods retailer's continued strong performance, he downgraded based on valuation. Baugh notes the stock reached his $40-$43 range, and is trading essentially on par with its historical average valuation.
Given deceleration in square footage growth, and a decline in the expected earnings-per-share growth rate of about 20%, Baugh says he sees little opportunity for further multiple expansion. He notes Bed & Bath delivered another strong quarter in the first quarter, despite challenges in the prior year's comp-store sales and the lackluster retail environment.
The retailer's 19 cents earnings per share beat his 18 cents estimate. He raised the $1.20 fiscal 2004 (Feb) earnings per share estimate to $1.21.