Best Buy Bottoming? 5 Analysts Unpack Q4 Earnings: 'We See Signs, But It's Too Early'

Shares of Best Buy Co Inc BBY were tanking in early trading on Friday, despite the company reporting higher-than-expected results for the fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Goldman Sachs analyst Kate McShane maintained a Buy rating, while raising the price target from $81 to $90.
• JMP Securities analyst Christopher Horvers reiterated a Neutral rating, while lifting the price target from $78 to $89.
• Truist Securities analyst Scot Ciccarelli reaffirmed a Hold rating, while raising the price target from $68 to $87.
• Wedbush analyst Seth Basham reiterated a Neutral rating, while raising the price target from $75 to $85.
• KeyBanc analyst Bradley Thomas maintained a Sector Weight rating on the stock.

Check out other analyst stock ratings.

Goldman Sachs: Best Buy reported better-than-expected quarterly results and its fiscal 2025 guidance “suggests a potential recovery in the second half of the year,” McShane said.

The company’s full-year adjusted operating margin “is expected to be 4.0% at the midpoint of guidance with a variety of tailwinds driving gross margin expansion,” the analyst stated. “Industry-wide demand is expected to continue to stabilize this year following two years of declining demand."

JMP Securities: “We continue to see signs of the category bottoming (laptops turning positive in 4Q, TV units up in 2023 and 2H>1H) and we are now 4 years out from early lockdown CE demand,” Horvers wrote in a note.

“That said, given TV and appliances are roughly one-third of sales, with ASP headwinds on promotions and uncertain innovation, combined with an increasingly value-conscious consumer and the inherent big ticket/discretionary nature of the assortment, it still feels too early to call the bottom,” he added.

Truist Securities: Although Best Buy’s guidance came in-line with expectations, its indexed sales versus 2019 “are now running below its historical normalized growth rate (i.e. vs +1%-2% CAGR),” Ciccarelli said.

“Further, our on-site observations suggest that the company is tightly managing its labor model, but think insufficient labor levels can then work against Best Buy from a share perspective,” the analyst wrote. “We believe the company is controlling what they can, is seeking adjacent categories to help boost growth and should start to post +LSD comps by 3Q/4Q."

Wedbush: Best Buy continue to see declines in comp sales in the first half of 2024, but expects positive comps in the back half to reach its full-year guidance of -3% to 0%, Basham said.

“There are building signs of stabilization in consumer electronics, with laptop and TV unit sales again increasing for BBY in 4Q24, and replacement and innovation cycles likely to build from here,” he added.

KeyBanc: The company is “benefiting from improvements in membership offerings, favorable product mix, and continued cost discipline,” Thomas wrote in a note.

“While 1QTD comps are trending -5.0%, management mentioned several green shoots for the business, including laptop comps trending positively 1QTD,” the analyst said. “While trends seem likely to remain soft into 1H24, we believe BBY results may be troughing, with significant opportunity for a LT recovery."

BBY Price Action: Shares of Best Buy had declined by 2.81% to $78.61 at the time of publication on Friday.

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