What happens next for Bed Bath & Beyond depends on this week’s strategic update, Morgan Stanley says

What happens next for Bed Bath & Beyond depends on this week’s strategic update, Morgan Stanley says

What happens next for Bed Bath & Beyond may hinge on the struggling retailer’s strategic business update this week, according to Morgan Stanley. Bed Bath & Beyond is expected to share details on its turnaround strategy on Wednesday. The call could outline a path forward for the retailer as it tries to win back investors even as it burns through cash and loses market share. “Cash burn, vendor support and current trends under the spotlight. Critical months ahead and holiday has never been more important. It all comes down to this,” wrote analyst Simeon Gutman in a Sunday note. Gutman, who has an underweight rating on the company, said he expects to learn more about the company’s attempts to secure financing. A Wall Street Journal report , citing people familiar with the matter, said last week that Bed Bath & Beyond is finalizing a loan in the range of nearly $400 million from Sixth Street Partners to pay its bills through the holiday season. “Assuming financing is obtained, Q4’s performance may hold the key to BBBY’s future viability. Given the company’s spotty Q4 track record in recent years, we are particularly interested in hearing how the company plans to navigate this upcoming holiday season,” he wrote. Still, Bed Bath & Beyond may find it difficult to convince investors after prior attempts to revive its brand failed. Shares of Bed Bath & Beyond, which surged 115% this quarter after getting a boost from meme stock traders, are still down nearly 27% this year, and off 64% its 52-week high. The company is dealing with a raft of challenges, including searching for a new CEO after ousting Mark Tritton earlier this summer. The stock also got dinged after activist investor Ryan Cohen sold his stake in the company. The analyst had a $2 price target for the company, implying downside of roughly 80% from Friday’s closing price of $10.70. Shares of Bed Bath & Beyond climbed 2.6% in Monday premarket trading. –CNBC’s Michael Bloom contributed to this report.

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