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Best Buy Stock: Why Most Wall Street Analysts Say ‘Hold’

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Current ratings

Currently, Best Buy (BBY) is rated a “hold” by the majority of the 25 Wall Street analysts covering the stock. As of December 22, Best Buy stock had “hold” ratings from 64.0% of analysts, “buy” from 28.0%, and “sell” from 8.0%. On December 4, Moffett Nathanson initiated coverage on Best Buy stock with a “sell” rating.

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Consensus “hold” rating

Best Buy’s transformation has been quite impressive. The company has been able to recover amid tough retail conditions while former peers like Circuit City and RadioShack have failed to survive.

After completing its Renew Blue strategy earlier this year, the company is now seeking growth opportunities through its new growth strategy called Best Buy 2020. At the Investor Day meeting held on September 19, the company revealed its new long-term financial goals for fiscal 2021. The company expects its overall revenue to reach $43 billion in fiscal 2021, compared to $39.4 billion in fiscal 2017. The company anticipates fiscal 2021 adjusted EPS in the range of $4.75 to $5.00, reflecting a compound annual growth rate of 8.0% to 9.0% from fiscal 2017.

Best Buy’s focus on categories like home appliances and smart home and the growth of its online business is expected to boost future performance. However, growing rivalry from online retailers like Amazon (AMZN) remains a major issue.

Price target

On December 19, Citigroup raised its price target for Best Buy stock to $69 from $60. On November 16, Wedbush cut its price target for Best Buy stock to $32 from $33 following its fiscal 3Q18 results.

As of December 22, the 12-month average price target for Best Buy stock was $60.38. This price target reflects a potential downside of 10.0%. As we mentioned in Part 1 of this series, Best Buy stock has risen 57.3% on a year-to-date basis.

For more updates, visit Market Realist’s Consumer Discretionary page.

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