Overstock.com's bid for Bed Bath & Beyond assets could pay off over the long term
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Overstock.com (NASDAQ:OSTK) tracked slightly higher in early trading on Wednesday to follow the 3.66% gain on Tuesday. The online retailer is getting some more attention from analysts and investors after bidding $21.5M for Bed Bath & Beyond's (OTCPK:BBBYQ) assets.
Bank of America thinks the pickup of the assets could be a strategic low-cost sales driver for Overstock.com (OSTK).
Though BB&B’s assets may not be a large revenue driver for OSTK, analyst Curtis Nagle pointed out the deal only represents ~6% of cash for OSTK. He noted that mailing lists, registries, and other customer data could be included in the deal, which could help OSTK with targeting customer acquisition. OSTK is seen potentially gaining new customers through the Bed Bath & Beyond assets as well as the website and mobile app. While Bed, Bath & Beyond's market share of 8% in 2016 has shrunk to only 3% in 2022, BofA estimated that for every 1% of BB&B revenue, Overstock revenue would increase 3% and adjusted EBTIDA could go up by ~$10M. Those numbers could help the Bed Bath & Beyond asset bid pay off over the long term.
Bank of America has a Neutral rating on Overstock.com (OSTK) and price objective of $21.50.
Shares of OSTK moved up 0.10% premarket to $20.98.