UPDATE 1-Citi cuts Bed Bath, ups Williams Sonoma on online presence

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Tue Feb 14, 2012 1:07pm GMT

* Raises Williams Sonoma price target to $45 from $39

* Cuts Bed Bath's price target to $65 from $71

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Feb 14 (Reuters) - Bed Bath & Beyond Inc (BBBY.O) will be hurt by relatively lower investment in e-commerce and increased competition from online retailers, Citigroup said and cut the home goods retail chain's stock to "neutral" from "buy."

The company may also be hit by the potential departure of key merchandising talent due to the relocation of the headquarters of its Best Buy Baby unit, Citi analyst Kate McShane said in a note to clients.

McShane, however, raised Williams-Sonoma Inc (WSM.N) to "buy" from "neutral" saying the home goods retailer will benefit from a strong online presence.

Williams Sonoma remains well positioned to compete with pure-play online home furnishings retailers based on its online presence and relatively high selection of in house and exclusive brands, the analyst said.

McShane is a four-star rated analyst for the accuracy of her earnings estimates on both companies, according to Thomson Reuters Starmine data. StarMine awards the top 10 percent of analysts five stars, the next 23 percent four stars, and the lowest 10 percent one star.

She cut her price target on Bed Bath's stock to $65 from $71, and raised that for Williams Sonoma to $45 from $39.

(Reporting by Chris Jonathan Peters in Bangalore; Editing by Roshni Menon)

((chris.peters1@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5786; Reuters Messaging: chris.peters1.thomsonreuters.com@reuters.net)) Keywords: BEDBATH/RESEARCH CITIGROUP

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