Oppenheimer upgrades to “outperform”
On March 22, Oppenheimer upgraded Best Buy (BBY) stock to “outperform” from “perform” and set its price target at $86. Best Buy’s transformation from a traditional brick-and-mortar retailer to a strong omnichannel player, its improved top line, and earnings growth prospects were behind the upgrade.
On March 20, Evercore ISI initiated coverage of Best Buy with an “in-line” rating and a price target of $75. Best Buy’s fiscal 2019 fourth-quarter results[1.ended February 2] were better than expected and its outlook for fiscal 2020 was strong, boosting its stock by 14.1% on February 27. As of March 22, Best Buy stock had risen 32.4% this year, surpassing specialty retailers GameStop (GME) and Aaron’s (AAN), which had returned -17.2% and 19.3%, respectively. Best Buy stock was also ahead of the S&P 500, which had risen 11.7%.
The company’s operating performance in fiscal 2019 and positive forecast led to many analysts raising their price target for Best Buy on February 28:
- Jefferies raised it to $72 from $70.
- Telsey Advisory Group raised it to $74 from $67.
- Credit Suisse raised it to $78 from $70.
- Morgan Stanley raised it to $77 from $65.
- UBS raised it to $72 from $57.
As of March 22, analysts’ average 12-month price target for Best Buy stock was $76.97, implying a ~10% upside. Of the 26 analysts covering the stock, seven recommend “buy,” 18 recommend “hold,” and one recommends “sell.”
Best Buy has survived a very challenging consumer electronics retail environment. It has closed unprofitable stores and is focusing on growth categories such as smart home technology.