Jefferies cuts Best Buy stock price target to $88, keeps Buy rating

On Thursday, Jefferies analysts adjusted their outlook on Best Buy stock (NYSE:BBY), reducing the price target from $92.00 to $88.00. Despite the adjustment, they maintained a Buy rating on the consumer electronics retailer. Currently trading at $65.58 with a P/E ratio of 15.19x, InvestingPro analysis suggests Best Buy is undervalued relative to its Fair Value. The analysts noted that the lower earnings per share (EPS) expectations for the calendar year 2025 (C’25) had already been factored into investor sentiment before the recent financial report, and no concerning signs regarding consumer behavior had emerged. Additionally, they highlighted a positive development in the company’s efforts to diversify its sourcing.

The commentary from Jefferies pointed out that while the earnings before interest and taxes (EBIT) percentage for C’25 is expected to be more heavily weighted towards the second half of the year, Best Buy’s management is well-positioned to handle tariffs effectively throughout the year. The company maintains a strong dividend yield of 5.31% and has raised its dividend for 7 consecutive years, according to InvestingPro data. The analysts anticipate double-digit percentage growth in EPS for the calendar years 2026 and 2027.

Best Buy shares were trading around $65, which came as a surprise to the analysts given the company’s solid guidance for the second quarter and the absence of red flags in consumer behavior. The analysts reaffirmed their Buy rating, signaling confidence in Best Buy’s performance and management’s strategy moving forward.

The reduction in the price target to $88.00 reflects a more conservative valuation by Jefferies but does not alter the firm’s positive outlook on Best Buy’s stock. The analysts’ expectations of double-digit EPS growth in the coming years suggest a belief in the company’s long-term potential and its ability to navigate the current market challenges.

In other recent news, Best Buy reported its first-quarter earnings for 2025, surpassing analyst expectations with an earnings per share (EPS) of $1.15 compared to the forecasted $1.07. Revenue reached $8.8 billion, slightly above the $8.75 billion forecast, showing resilience despite a 0.9% year-over-year decline. The company’s domestic comparable sales declined by 0.7%, although there was positive growth in computing and mobile phone sales. JPMorgan analyst Christopher Horvers adjusted Best Buy’s price target to $95 from $110 while maintaining an Overweight rating, citing a mixed financial report and reduced guidance for the second quarter. Truist Securities also revised its price target for Best Buy, increasing it from $64.00 to $69.00, while maintaining a Hold rating, noting that positive sales in computing and tablets were offset by weaker sales in other categories. Best Buy’s efforts to mitigate tariffs have been more successful than anticipated, yet sales momentum remains subdued. The company continues to navigate a challenging retail environment, with strategic initiatives in digital experiences and marketplace expansions being closely monitored by investors.

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