Shares of Bed Bath & Beyond (BBBY) are higher on Tuesday morning despite two Wall Street analysts having downgraded the stock on valuation concerns. UBS analyst Michael Lasser cut Bed Bath & Beyond's rating to Sell and recommended investors take profits after a 73% year-to-date run-up in the shares. Meanwhile, his peer at Raymond James also downgraded the stock to Market Perform, saying he cannot justify moving his price target higher to maintain a Strong Buy rating.

SELL BED BATH & BEYOND: UBS analyst Michael Lasser downgraded Bed Bath & Beyond to Sell from Neutral with a $20 price target. The analyst recommends that investors take profits after a 73% year-to-date run-up in shares, with the recent gains tilting the stock's risk-reward to the downside. Lasser added that Bed Bath's turnaround probably won't deliver "linear progress," while the challenges faced by the company are "deep and will take time to fix." Industry-wide sales of kitchen and furnishings will face pressure as consumers shift spending to areas like food away from home and travel on the other side of the pandemic, the analyst contended.

'TAKING A BREATHER' FOR NOW: Raymond James analyst Bobby Griffin also downgraded Bed Bath & Beyond to Market Perform from Strong Buy without a price target, saying he cannot justify moving the firm's price target higher to maintain a Strong Buy rating. The analyst argued that Bed Bath & Beyond's recent performance over the past few weeks stretches its valuation and creates a far more balanced risk/reward set up over the next few months.

Nonetheless, Griffin highlighted that his downgrade is not a reflection on Bed Bath & Beyond's turnaround potential. The analyst continues to believe that the new management team understands the core issues within the business and has already started to show progress in recent results. In addition, Bed Bath & Beyond’s $2.2B of available liquidity provides management ample flexibility to tackle the turnaround, he contended.

WHAT'S NOTABLE: Also citing valuation concerns, RBC Capital analyst Paul Treiber downgraded Blackberry (BB) to Underperform from Sector Perform with an unchanged price target of $7.50 as he believes justifying the current price would require value creation that is "overly optimistic." Now at multi-year highs, the stock is above peers despite no change to the company's fundamental outlook, Treiber told investors in a research note. The analyst also argued that the probability of an unannounced IP licensing gain appears low. BlackBerry confirmed that it sold 90 patents to Huawei and reached a patent licensing settlement with Facebook (FB). While the analyst acknowledged that these events are positive, he believes the magnitude of the potential one-time gain is likely to be smaller than the $7B increase in the company’s market cap.

PRICE ACTION: In morning trading, shares of Bed Bath & Beyond have gained about 2% to $31.37.