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Bed Bath & Beyond jumps 12%. What holds for the stock ahead of earnings

By:
on Jan 10, 2023
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  • Bed Bath & Beyond shares rose by double digits on Tuesday ahead of earnings
  • The stock has crashed in the last year on internal challenges and stock market woes
  • BBBY is unlikely to sustain the gains

Shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) rose by 12% on Tuesday after closing 23% higher the previous day. The gains come ahead of a key earnings report, expected on January 10 before market open. Does the market expect the company to boost its earnings?

It has already been a tough year for Bed Bath & Beyond. The stock of the American retail chain for domestic merchandise has already lost 87% in the last one year. The decline happened in the wake of a stock market crash in 2022, but BBBY also had its fair share of challenges.

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In its retail news earlier this month, BBBY said it was having a cash crunch and was edging toward bankruptcy. The company cited challenges relating to obtaining merchandise and attracting customers to its website and stores. BBBY has also witnessed its runaround strategy getting stalled by internal issues. The exit of its CEO Mark Tritton in June 2022 and other top executives added a thorn to an already wounded company.

In the latest update, BBBY hinted at further restructuring options, including selling assets. As it reports the third quarter results, analysts expect the loss to worsen to $1.96 per share. That is higher than a loss of $0.25 the prior year. BBBY has missed consensus estimates in five out of six earnings reports. Does the latest stock’s price action ahead of the crucial report suggest speculative buying?

BBBY price outlook and analysis

BBBY Chart by TradingView

A technical outlook shows BBBY is still bearish. The latest gains have been met with resistance, and the price is retreating. The stock maintains below the moving averages, while the MACD indicator is very bearish.

What next for BBBY?

Despite the upside, BBBY is still very bearish and could be gaining due to speculative buying. Investing in the stock at current levels is not recommended as it could crash further if the earnings disappoint. Even if it doesn’t, the fundamentals are skewed against the stock.