The retailer’s online sales have remained strong even after most of its stores have reopened.
Justin Sullivan/Getty ImagesBest Buy stock has been on a tear in 2020, rising nearly 30% as people stock up on electronics to facilitate working and learning from home. The retailer’s earnings, due out early Tuesday, will show whether it can live up to high expectations.
Best Buy has benefited in a number of ways from the pandemic. It has had strong online sales as people snap up computers and tablets to improve their stay-at-home life, a trend that is likely to continue through back-to-school season. Importantly, the company’s digital top line has remained strong even after most of its stores have reopened.
That has led bulls to argue that Best Buy will emerge from the crisis as a retail winner.
Indeed, hopes are running high and price targets have been marching upward in recent months, with half a dozen increases this month alone. That means Best Buy shares could falter if it isn’t a fairly robust report.
Of the 27 analysts tracked by FactSet who cover the stock, 41% rate it at Buy or the equivalent, 48% rate it at Hold and 11% are bearish. The average analyst price target is $114. The stock was at $116.16 Monday morning, up 1.9%. The Dow Jones Industrial Average was up 0.7%.
On Monday, Raymond James analyst Matthew McClintock reiterated a Strong Buy rating on the shares and added $35 to his price target, to $135. He cites the company’s “best-in-class fulfillment capabilities, high mix of essential items” and service initiatives that should allow it to gain more market share, especially at a time when consumers appear more willing to trade up to premium electronics.
By contrast, RBC Capital Markets’ Scot Ciccarelli reiterated a Sector Perform rating and $99 price target on Monday. He agrees that the company has performed well throughout the crisis, and strong sales trends will be evident in the quarter. “Despite strong execution and what we believe are very solid demand trends for technology, we remain officially neutral on BBY shares as we look for a better opportunity to become more constructive on the stock given the future potential pressure on discretionary spending and the sharp rise in Best Buy shares.”
Analysts are looking for the company to earn $1.04 a share on $9.73 billion in revenue, according to data from FactSet. That compares with EPS of 67 cents and revenue of $8.56 billion in the previous quarter. The stock fell after that report. Best Buy’s bottom line has come in better than consensus estimates every quarter for the past five years.
Best Buy scheduled a conference call at 8 a.m. Tuesday.
Write to Teresa Rivas at teresa.rivas@barrons.com
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August 24, 2020 at 09:25PM
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Best Buy Reports Earnings Tomorrow. Here’s What to Expect. - Barron's
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