Investors should steer clear of shares of Bed Bath & Beyond , especially after the stock’s “latest meme stock frenzy,” according to Baird. Analyst Justin Kleber downgraded the home retail stock to underperform, saying in a note to clients that shares look unattractive at these levels. “Shares have surged 148% since July 27, including +86% the past two trading days,” he wrote. “This frenzied move ( > 100% of the public float traded on Monday) has been driven by non-fundamentally focused market participants. With market share losses accelerating and BBBY burning cash, fundamental risk/reward looks unattractive, in our view.” The downgrade from Baird comes on the back of Monday’s meme trader-driven rally , which saw shares of Bed Bath & Beyond close up nearly 40%. The move coincided with a jump in message board mentions bullish on the stock. It wasn’t the first time Bed Bath & Beyond, along with names like AMC Entertainment and GameStop , has been a target of meme traders on Reddit’s WallStreetBets discussion board looking to force short sellers into what’s known as a short squeeze. More than 46% of Bed Bath shares available for trading are sold short, according to FactSet. According to Kleber, the outlook for Bed Bath & Beyond is murky ahead as the company rapidly loses market share and faces a difficult macroeconomic backdrop. At the same time, the retailer continues to burn through cash and could face serious liquidity risks ahead. “Supply chain disruptions have exposed BBBY’s antiquated infrastructure and wreaked havoc on the business at the same time the company’s pivot toward owned brands has not resonated with customers,” he wrote. Baird maintained its $4 price target on the stock, which implies a 65% downside for the stock from Monday’s close. Shares of Bed Bath & Beyond have tumbled about 22% this year-to-date. The stock was up another 10% in premarket trading. — CNBC’s Michael Bloom contributed reporting
