J.P. Morgan Reduces Price Target On Best Buy

According to J.P. Morgan, Best Buy BBY ended the year with $1.1B in cash and expects its working capital position to improve and also added $1B in debt. J.P. Morgan reported that TVs and PC represent more than 40% of sales including attachments. “In 4Q, TVs comped down an estimated high teens percentage but improved closer to down 10% in December. However, in spite of easier comparisons (TV comps went from +LDD to -LSD from 3Q to 1Q a year ago), TVs continue to comp down low double digits. In mobile computing (netbooks, notebooks, and tablets), sequential comps swung to negative mid single digits from positive mid single digits in both December and 3Q. The company highlighted more difficult comparisons, but the Win 7 lift peaked in December. We believe the iPad2 launch delayed consumption of both tablets and notebooks. While we estimate business has picked up, the consumer behavior clearly shows that tablets are at risk to cannibalizing notebooks at a greater pace than hoped.” Best Buy closed yesterday at $30.13.