Best Buy Co., Inc. (BBY) is enjoying a wave of optimism from analysts following its better-than-expected second-quarter financial results. The company reported adjusted earnings per share (EPS) of $1.34, surpassing the anticipated $1.16, and sales of $9.29 billion, outperforming the $9.24 billion consensus forecast. This positive performance has led to upward revisions in price targets by several analysts.
J.P. Morgan’s Christopher Horvers maintained an Overweight rating and increased the price target from $101 to $111. Horvers points to the waning impact of spending pull-forward in areas like computing, TVs, and appliances. With a higher installed base, he anticipates a smooth transition this year. He also expects Best Buy to benefit from increasing average selling prices (ASPs) as AI adoption in consumer electronics advances. He predicts that Best Buy can achieve a 5% operating margin, with the potential to reach 6% as key categories, particularly home theater, rebound.
Telsey Advisory Group’s Joseph Feldman echoed the positive sentiment, reiterating an Outperform rating and raising the price target to $115 from $95. Feldman highlights Best Buy’s robust strategy, strong leadership, and leading position in omnichannel capabilities, real estate optimization, and new revenue streams like memberships and healthcare. He believes these factors will position the company well for growth as the industry stabilizes. Feldman has raised his 2024 EPS estimate to $6.33 from $6.18, anticipating a lower comparable sales growth of (2.1%) and a ten-basis-point margin expansion to 4.2%. For 2025, he projects EPS of $6.97, with a 2.0% comp and a 30-basis-point margin expansion to 4.5%.
Piper Sandler’s analyst reaffirmed the Overweight rating and raised the price target to $114 from $100. Despite a negative second-quarter comparable sales growth and a slight second-half downgrade, the analyst sees the share gain as reflecting robust EBIT margin expansion and improved sales. With improving comps, efficient labor management, and growth in computing and tablets, the analyst envisions a bright future fueled by AI, PC replacement, and innovation.
Truist Securities’ Scot Ciccarelli maintained a Hold rating but increased the price target to $107 from $86. He acknowledges the easing of pandemic-driven demand pull-forward, leading to the expectation that the consumer electronics upgrade cycle will resume. Laptop unit sales stabilized in 2023 and showed positive first-quarter comps, with further improvements anticipated due to AI innovation. However, he notes that high-ticket items like appliances remain sluggish, reflecting ongoing demand challenges. Ciccarelli believes the third quarter has started strongly, with flat comps and positive trends in laptops and tablets, which could also boost mobile sales as AI tech advances. He raised his CY24/CY25 EPS estimates to $6.40/$6.95 from $6.25/$6.85 and introduced a CY26 estimate of $7.60.
While the majority of analysts are bullish on Best Buy’s prospects, not all share this sentiment. B of A Securities’ Elizabeth Suzuki maintained an Underperform rating and increased the price target from $70 to $80. Loop Capital’s Anthony Chukumba maintained a Buy rating and raised the price target from $100 to $110. Evercore ISI Group’s Greg Melich maintained an In-Line rating and boosted the price target from $90 to $94.
Investors interested in gaining exposure to Best Buy can consider the Invesco S&P Ultra Dividend Revenue ETF (RDIV) and the Xtrackers S&P ESG Dividend Aristocrats ETF (SNPD).
Best Buy shares closed down 1.10% at $99.08 at the last check on Friday.
