Best Buy’s stock has fallen 2.3% on a year-to-date basis
Best Buy’s (BBY) stock fell 2.6% to $29.95 on February 19 following a downgrade by Goldman Sachs from “buy” to “neutral.” A sluggish wireless market triggered the downward revision. As discussed in part one of this series, a slowdown in mobile phone sales adversely impacted Best Buy’s holiday sales.
Best Buy’s stock has fallen 2.3% on a year-to-date basis. The stock prices of peers GameStop (GME), Aaron’s (AAN), and Conn’s (CONN) have fallen 0.4%, 2.9%, and 18.3%, respectively, since the start of 2016. The SPDR S&P Retail ETF (XRT) and the S&P 500 Index have fallen 3.8% and 4.7%, respectively, since the start of the year.
Best Buy constitutes 1.2% of XRT and 0.1% of the iShares Russell 1000 Value ETF (IWD).
Fiscal 4Q16 earnings expectations
Best Buy is scheduled to announce its earnings for fiscal 4Q16, which ended January 30, 2016, on February 25. Analysts expect Best Buy’s adjusted EPS (earnings per share) to come in at $1.39, a 6.1% decline on a YoY (year-over-year) basis. For fiscal 2016, the adjusted EPS are expected to be $2.64, reflecting a 1.5% rise on a YoY basis.
As of February 19, 12 of the 24 analysts following Best Buy gave it a “hold” recommendation. Ten analysts gave a “buy” recommendation, and two gave a “sell” recommendation. The 12-month target price for Best Buy’s stock is $34.10, which indicates potential for a 13.9% rise from the stock price on February 19.
Best Buy has been implementing several measures to boost its sales, including the opening of several stores-within-stores in collaboration with key vendors. The company is also streamlining its operations and bringing down its costs. The retailer has been experiencing strong sales of large screen TVs. However, subdued consumer spending on discretionary goods and a slowdown in mobile sales have been acting as hurdles to the company’s revival.
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