Of all the reasons for a stock to suddenly blast upward, revealing the troubling financial status of the underlying business might be pretty far down the list. Bed Bath & Beyond’s (NASDAQ:BBBY) response to potential bankruptcy, however, might also be giving the stock a serious leg up.
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Recently, an SEC filing emerged that noted that Bed Bath & Beyond simply doesn’t have the cash on hand to pay off its current debt load. That debt load is massive, too; at last report, the company owes $2.57 billion in current liabilities. That includes a pair of credit facilities valued at $375 million and $550 million each. In turn, company officials noted that it was considering “all strategic alternatives” to pay off its outstanding debt. That news led S&P Global Ratings to cut Bed Bath & Beyond’s credit rating from CC to D.
Not surprisingly, store closures were on deck, which included 87 Bed Bath & Beyond stores, Five Buy Buy Baby stores, and 50 Harmon locations. That’s all the Harmon locations there are, reports note. Some even speculate that certain stocks stand to benefit from the Bed Bath & Beyond troubles, starting with Wayfair (NYSE:W) and a slew of brick-and-mortar heavy retailers from Target (NYSE:TGT) to Macy’s (NYSE:M).
Wall Street holds out little hope for Bed Bath & Beyond. Analyst consensus currently calls BBBY stock a Strong Sell with an average price target of $1.36 per share, implying 52.61% downside risk.
