Best Buy To Stabilize Despite A Soft Q1, Analysts Say

Best Buy Co Inc BBY reported first-quarter FY24 earnings. Following are the comments of different analysts on the same.

Truist Securities – Reiterates Hold, price target lowered from $87 to $86

Analyst Scot Ciccarelli expects some comp acceleration through CY24 as pandemic-related pull forward demand continues. Meanwhile, the analyst suspects that macro pressures on discretionary goods will still limit the rate of improvement.

The analyst notes the stock’s 10% gain after the results is largely a function of depressed sentiment coming into the print and is reversing the downward move from the last six weeks.

Overall, the analyst notes that the challenging environment will likely limit incremental upside and prefers to remain on the sidelines.

Goldman Sachs – Reiterates Buy, price target raised from $90 to $95

Analyst Kate McShane noted BBY reported better-than-expected results and provided guidance that still suggests a potential top-line recovery in the second half of the year.

Due to a consumer who has continued to seek value, the promotional environment during the quarter was greater than expected, noted the analyst.

ASPs (average selling price) was higher than last year due to a greater mix of higher ticket items like TVs and laptops, said the analyst.

The analyst raised FY EPS estimate to $6.15 (from $6.11) to reflect slightly higher sales and margins. 

J.P.Morgan – Reiterates Overweight 

Analyst Christopher Horvers said the management called out top-line strength in services and laptops that was more than offset by weakness in appliances, home theater, gaming, and mobile phones. 

The first-quarter beat Street on margins as the analyst previewed, with comps at the lower end of expectations. 

Telsey Advisory Group – Reiterates Outperform, price target of $95

Analyst Joseph Feldman noted Best Buy generated better-than-expected 1Q24 EPS growth of ~5 % to $1.20, exceeding the former’s projection of $1.07, given better-than-anticipated profitability.

The 1Q24 comp was soft and below expectations, driven by a challenging industry and macroeconomic backdrop, with disappointing trends during the quarter in terms of inflation, interest rates, and consumer confidence, said the analyst.

According to the analyst, promotions in the industry have been higher-than-expected, pushing Best Buy to implement more price investments going forward. 

The analyst noted Best Buy has a sound strategy, strong management team, and is ahead of many retailers in its omnichannel capabilities, optimization of real estate, and new revenue streams, like membership and health.

Price Action: BBY shares are trading higher by 1.85% at $83.06 at the last check Friday.

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