Best Buy gets double-upgrade at Citi on expectations of sales growth
By Steve Goldstein
Rating swings to buy from sell on Best Buy's stock
Analysts at Citi gave electronics retailer Best Buy Co. Inc. a rare double-upgrade on Monday, boosting their assessment in anticipation that same-store sales will start rising.
Analysts led by Steven Zaccone upgraded Best Buy to buy from sell as they said the electronics giant is "in the late innings of [same-store sales] declines and is approaching the positive inflection point."
Replacement cycles from pandemic-era purchases of laptops are starting to take hold, and should build momentum as new artificial-intelligence innovation takes hold. That's as much as 25% of Best Buy's business, the Citi analysts say.
Best Buy's stock (BBY) rose 2.5% in premarket trading Monday.
In its fiscal first quarter ending May 4, comparable-store sales fell 6.1%, as the company said annual sales growth would range from a drop of 3% to no change.
The analysts also noted that first-quarter margins beat expectations.
"Given the outperformance, we believe BBY can continue to flex company levers to protect EBIT margin if the competitive environment gets more promotional than expected. These tactics include vendor funded promotions, sponsored adds, and strong execution on cost control," they said.
They boosted their target price to $100 from $67.
Best Buy's stock has gained more than 8% this year through Friday, while the S&P 500 index SPX has advanced nearly 11%.
-Steve Goldstein
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06-03-24 0847ET
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