- Bank of America analysts resumed coverage of Bed Bath & Beyond after meme mania cooled down.
- "The momentum from meme investing has likely passed," said the analysts who briefly paused coverage.
- BofA rated the stock as a buy with a $38 price target.
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Bank of America analysts say meme mania for Bed Bath & Beyond has cooled off, prompting them to resume covering the stock for investors.
In a Thursday note, Bank of America analysts led by Curtis Nagle said Bed Bath & Beyond shares are "once again trading on fundamentals," and rated the stock to a buy rating. The analysts stopped coverage of the company on June 3 after the price surged 62% in a single day amid hype from retail traders.
The Union, New Jersey-based home goods retailer became a meme stock in January, along with companies like AMC Entertainment and BlackBerry, after retail traders poured into shares of GameStop to cause a short squeeze. Then in June, retail traders again hyped up shares of Bed Bath & Beyond as other meme stocks also came back into the spotlight.
"While not quite as extreme as GameStop, for example, Bed Bath & Beyond did see a large increase in mentions on retail investor forums in January and late May through early June," the analysts said. But, "over the past two weeks, Bed Bath & Beyond has seen a sharp reduction in both those factors, which suggests that the momentum from meme investing has likely passed."
Since the craze earlier this month, shares are trading closer to pre-surge levels, and the social-media hype, trading volumes, and short interest, have all moderated, the analysts said. With that, they added a $38 price target for the stock, which traded at $29.89 at at 11:26 p.m. in New York.
The analysts attributed their bullish view to Bed Bath & Beyond's long-term turnaround, including the company's largest-ever new product rollout by year-end, store resets that will improve the shopping experience, closures of 200 underperforming locations, and a pickup in back-to-college and wedding registry purchases as the economy re-opens.