New CEO Hire Sends Bed Bath & Beyond Shares Higher

Analyst believes new hire could prompt short squeeze

Bed Bath & Beyond Inc. (BBBY) shares soared 25% during Thursday's session after the retailer appointed former Target Corporation (TGT) chief merchandising officer Mark Tritton as CEO to succeed interim CEO Mary Winston. Tritton has over 30 years of experience in the retail industry and is widely credited for helping Target connect its online and in-store businesses.

The announcement comes shortly after Bed Bath & Beyond said that it would close 60 stores this year and posted its tenth straight quarter of same-store sales declines. Several activist investors have also been involved with the stock over the past few months, ousting former CEO Steven Temares and shifting the near-term focus to cost reduction and optimizations.

Morgan Stanley analyst Simeon Gutman believes that the high-quality hire could prompt a short squeeze and send shares above his price target of $12 per share. While the short-term move may be bullish, he cautions that underlying concerns will linger and execution risk remains high. The firm maintains an Equal Weight rating on the stock with a $12 price target. On the other hand, Telsey Advisory upgraded Bed Bath & Beyond stock from Market Perform to Outperform and raised its price target from $14 to $16 per share following the new hire.

Chart showing the share price performance of Bed Bath & Beyond Inc. (BBBY)

From a technical standpoint, the stock broke out from trendline resistance at $11 to briefly touch the 200-day moving average at $12.66 during Thursday's session. The relative strength index (RSI) soared to overbought levels of 72.26, but the moving average convergence divergence (MACD) experienced the start of a bullish crossover. These indicators suggest that the stock could see some near-term consolidation.

Traders should watch for consolidation between the 200-day moving average at $12.66 and trendline support at $11.00 over the coming sessions. If the stock breaks out, traders could see a move toward prior highs of nearly $20. If the stock breaks down, traders could see a move toward the 50-day moving average at $9.35 before another attempt higher.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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