Best Buy Co. (NYSE: BBY) is one of the most recognized destination retailers for electronics and appliances in America. It was also one of the companies that was “going to be destroyed by the internet” and was even referred to as “Amazon’s showroom.” And twenty-plus years later, Best Buy is still here.
Not all success stories stay successful forever… Or at least not “always.” Best Buy’s stock took a significant hit the first week of March as its earnings and guidance proved to be less than impressive. Tariffs and a weak consumer are hurting Best Buy and just about every other retailer that comes to mind — even the much larger destinations like Walmart and Target.
There was a significant analyst call that gave investors a bird’s eye view into the coming malaise that took Best Buy from $86.74 down to $75.20 in a single day (that’s more than a 13% drop!). The key difference of this call is that it was issued ahead of the news rather than the traditional reaction to earnings that is usually seen in research reports.
Evercore ISI added Best Buy’s stock to its “Strategic underperform” list just a day ahead of this poor earnings report. The report noted that management’s guidance is likely to reflect current trends for consumers and that the stock will likely push the stock towards $80 rather than seeing a breakout to head toward $100. The firm opined with shares just under $90 that it was expected to face pressure from a slower consumer and a highly promotional push to generate sales.
Again, that call from Evercore ISI was ahead of the news report rather than a reactionary report.
Well, it turns out that other analysts on Wall Street have been throwing in the proverbial towel in their reactionary calls. Some reports have kept positive ratings, but here are a dozen analyst price target cuts that have been seen in the last 24 hours since Best Buy’s earnings report:
- Reiterated as Underperform, price objective cut to $75 from $80 at BofA Securities;
- Maintained as Buy, price target cut to $93 from $105 at Citigroup;
- Maintained as Buy, price target cut to $110 from $117 at D.A. Davidson;
- Maintained as In-Line, price target cut to $80 from $95 at Evercore ISI Group;
- Maintained as Buy, price target cut to $90 from $105 at Guggenheim;
- Maintained as Buy, price target cut to $92 from $106 at Jefferies.
- Maintained as Overweight, price target cut to $110 from $115 at JPMorgan;
- Maintained as Equal-Weight, price target cut to $85 from $100 at Morgan Stanley;
- Maintained as Overweight, price target cut to $92 from $102 at Piper Sandler;
- Maintained as Outperform, price target cut to $100 from $110 at Telsey Advisory Group;
- Maintained as Hold, price target cut to $81 from $95 at Truist Securities;
- Maintained as Neutral, price target cut to $83 from $90 at Wedbush Securities.
Best Buy shares were last seen trading at $76.00 with a 52-week range of $69.29 to $103.71. Its market cap is now back down to $16.4 billion. Best Buy now pays a 4.3% dividend yield based on the current share price and pays out just over half of its adjusted earnings per share to fund that dividend.
Some investors claim day in and day out that analyst reports simply do not matter in the modern era. Seeing a bunch of price target cuts after disappointing news might back that notion up, but what about when analysts stick their neck out with bold calls (particularly bearish calls that are generally unpopular) right before the news comes out?
Oggonomics maintains no formal rating nor price targets on Best Buy. The price targets and ratings above were issued by each firm as shown.
