Bed Bath & Beyond issued 'Underperform' rating

Friedman, Billings, Ramsey analyst Stephen Chick gave the Union, N.J.-based retailer a $26.50 per-share price target--representing a roughly 18 percent downside from the company's current stock price.

"We think that Bed Bath & Beyond's financial struggles (under way since 3Q05) are more structural than the general consensus realizes," Chick wrote Friday in a research note.

He also added that competition for the retailer is heightening and the nation's slowing economy is exacerbating woes within the industry, where sales are down 5 percent year over year and have already forced competitor Linens 'n Things Inc. into bankruptcy.

"The company is maturing and faces stiff competition from alternative classes of trade who are attracted to the high-margin nature of the sector," Chick wrote. "This should continue."

Bed Bath & Beyond fell 54 cents, or 1.7 percent, to $31.12 in trading Friday.