Amazon.com, Inc. AMZN has been the talk of Wall Street for years now due to its disruptive retail track record and disruptive potential in new markets, such as the pharmacy business. But despite the trail of dead Amazon has left in the retail sector, one unlikely company has overcome the odds and thrived in presence of the Amazon juggernaut.
On Wednesday, Loop Capital analyst Anthony Chukumba praised Best Buy Co Inc BBY for successfully sidestepping Amazon’s charge. After meeting with senior Best Buy management, Chukumba is even more convinced that Best Buy is positioned to grow revenue and market share (see Chukumba's track record here).
“Best Buy remains one of our favorite long ideas in the specialty hardlines retailing sector, and one of the few companies that has definitively proven it cannot just survive, but thrive, in the ‘post-Amazon era’ in our opinion,” Chukuma wrote.
Best Buy isn’t expected to report fiscal Q3 earnings until Nov. 15, but Chukuma said investors have reason for optimism. Sales comps should be boosted by the new Samsung Electronic SSNLF Galaxy Note 8 lapping the disastrous launch of its predecessor model last year. In addition, Best Buy should benefit from strong demand for the Nintendo Co., Ltd (ADR) NTDOY Switch hybrid.
In the fourth quarter, however, Chukumba warned that aggressive video game pricing and Apple Inc. AAPL iPhone 8 and iPhone X cannibalizing demand for other electronic devices may lead to a more challenging quarter.
Over the longer term, Best Buy should continue to benefit from the rise of connected home technology and accelerating e-commerce growth.
Best Buy’s 84 percent gain in the past three years is all the proof investors need that the company has cracked the Amazon code. Loop has a Buy rating and $72 price target for Best Buy.
Related Link: Best Buy Has Survived And Thrived In The E-Commerce Revolution
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