Strong Quarterly Results Drive a Share Price Pop for Best Buy; We Still See Attractive Upside

Narrow-moat Best Buy reported strong third-quarter results, with sales of $10.6 billion and EPS of $1.22 edging our $10.2 billion and $1.20 EPS estimates. Notably, management maintained guidance for its critical holiday fourth quarter but lifted its full-year targets consistent with quarterly outperformance. While we intend to modestly lower our long-term operating margin assumptions—consistent with deleverage relative to investor day guidance and slower than foreseen traction in the firm's loyalty offering—the impact should be offset by time value and strong quarterly results, resulting in minimal net impact to our $105 fair value estimate.