BofA Securities analyst Curtis Nagle downgraded Beyond, Inc. (NYSE:BYON) to Underperform from Neutral, lowering the price forecast to $6 from $12.50.
Following the "disappointing" third-quarter results, the analyst expresses uncertainty about the timing and potential for ongoing turnaround efforts. The decline in orders remains a critical issue, which management acknowledged during the Investor Event.
While a reduction in marketing spend has boosted EBITDA, the analyst writes that customer affinity for the brand appears closely linked to marketing and promotions, making near-term improvements unlikely. Additionally, Beyond is navigating a complex landscape with three brand relaunches and two new partnerships, adding significant challenges, all while cash reserves continue to dwindle.
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Despite cutting fixed costs by $65 million and potential asset sales on the horizon, the situation remains precarious, Nagle added.
The company has made significant strides in reducing its fixed cost base and is transitioning to an asset-light model, focusing on brand and marketing partnerships to revive Beyond's three brands, which could help mitigate further losses.
However, Beyond has yet to reverse its revenue declines, and additional cuts to marketing could pressure revenues more than anticipated, according to the analyst.
While Nagle has observed positive outcomes from other eCommerce retailers expanding their physical presence—such as Wayfair Inc.'s (NYSE:W) early success with its Wilmette store—there are doubts about whether partnering with struggling retailers will effectively reverse Beyond's declining revenue trends.
This skepticism arises given that Beyond is currently undergoing its own turnaround efforts and its products have not been resonating well with customers, the analyst adds.
The analyst projects the company to register FY24 earnings per share of $4.02 loss, compared with earlier projection of $3.67 loss per share.
Price Action: BYON shares are trading lower by 1.35% to $6.60 at last check Friday.
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