Shares of Bed Bath & Beyond (NASDAQ:) are down nearly 5% after Loop Capital analyst Anthony Chukumba reflected on the WSJ report that several potential suitors are interested in the company’s buybuy Baby business.

According to the report, potential buyers expressed interest in the buybuy Baby business following the sale of the Baby-Gear unit by an activist investor at a U.S. chain retail stores.

Private equity firm Cerberus Kapital Management and blank-check company Tailwind Acquisition Corp. are the latest possible acquirers. They were both led by Philip Krim, former CEO of Casper Sleep (NYSE.)

Bed Bath & Beyond has been considering different alternatives for buybuy Baby after the retailer added three new directors to the unit’s board as a part of a settlement agreement with activist investor Ryan Cohen last month. The committee that monitors the review of buybuy Baby was also populated by two directors who were recently added.

Chewy (NYSE:) co-founder and GameStop (NYSE:) chairman Ryan Cohen holds a 9.8% stake in Bed Bath & Beyond. Cohen has stated that buybuy Baby could have a value of as high as the company’s entire market capital, with a total valuation exceeding $1.4 billion. Cohen also urged Bed Bath & Beyond to explore a full sale option for its baby gear business.

Bed Bath & Beyond reported worse-than-expected financial results a few weeks ago, with its net sales plummeting 22% to $2.1 billion in the quarter that ended Feb. 26.

However, Chukumba said that the suitor interest “changes nothing” for BBBY. The analyst was confident that the business would attract potential suitors. However, his valuation estimates were vastly different to those of Cohen.

“We believe buybuy BABY is likely to be valued at no more than 10x F2021 EBITDA (implying a valuation of ~$700M) given the significant secular headwinds the baby products retailing industry currently faces(most notably the declining US birth rate and women becoming mothers for the first time later in life) and the chain’s less than stellar profitability (i.e., Best Buy posted a far superior nearly 8% EBITDA margin in F2021 and currently trades for less than 5x EBITDA),” Chukumba said in a client note.

“We also believe a buybuy BABY sale would likely result in a hefty tax bill for BBBY and believe the net proceeds of a transaction would be applied toward repaying a portion of BBBY’s $1.2B in debt as opposed to benefiting equity holders. Finally, we note given selling BBBY’s “crown jewel” would result in a money-losing remaining company that would still be saddled with a sizeable debt burden,” the analyst added.

Chukumba, Net-net reiterated its Sell rating with a target price of $5.00 per share.

By Senad Karaahmetovic