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On Friday, Piper Sandler analyst Peter Keith adjusted the price target for Best Buy (NYSE:BBY) stock, listed on the New York Stock Exchange (NYSE: BBY), to $82 from the previous $82, while maintaining an Overweight rating. Keith’s reassessment followed Best Buy’s first-quarter results, which aligned closely with expectations, and a modest reduction in the full-year guidance. Best Buy shares fell approximately 8% today, continuing a challenging period that has seen the stock decline over 24% in the past six months. According to InvestingPro analysis, the stock appears undervalued at current levels, with analyst targets ranging from $63 to $95.
Keith noted that Best Buy is handling the challenges presented by tariffs effectively, with the impact being less severe than anticipated. However, he pointed out that the company’s comparable store sales (comp) results for the first quarter, as well as the outlook for a slight decrease in the second quarter, were mildly disappointing. The analyst also mentioned that price increases resulting from tariffs could potentially dampen consumer demand in the second half of the year. Despite these challenges, Best Buy maintains strong fundamentals with a healthy 22.6% gross profit margin and continues to reward shareholders with a substantial 5.73% dividend yield.
Despite the sluggish comp trends, there are positive aspects to consider. Best Buy’s gross margin drivers are expected to gain momentum with the introduction of Market and BBY Ads in the latter half of the year. Additionally, the company has some product innovations on the horizon, including the launch of the Nintendo Switch 2 in June and the phasing out of support for Windows 10 in October.
Keith’s revision of the price target reflects a change in the earnings multiple from 13 times to 12 times, based on a less optimistic revenue outlook for Best Buy. He maintains that while the current share price drop seems somewhat excessive, the overall picture includes manageable tariff impacts and forthcoming initiatives that could support the company’s financial performance.
In other recent news, Best Buy’s earnings and revenue results have been a focal point for analysts. The company reported a slight decrease in comparable store sales, with a 0.7% drop, despite strong performance in computing and tablets. Best Buy has adjusted its 2025 guidance, now expecting earnings per share to range between $6.15 and $6.30, and comp sales to vary from -1% to +1%, factoring in tariff impacts. KeyBanc maintained a "Sector Weight" rating, while Wedbush reduced its price target to $70, maintaining a neutral stance due to unmet revenue expectations but better-than-expected bottom-line results.
Goldman Sachs, on the other hand, cut its price target to $94 but kept a Buy rating, highlighting potential growth from new products and innovations. DA Davidson also lowered its price target to $90, maintaining a Buy rating, and noted improvements in Best Buy’s handling of tariffs. Jefferies decreased its price target to $88 while keeping a Buy rating, expressing confidence in Best Buy’s management and future earnings growth. These recent developments indicate varying analyst perspectives, with some expressing optimism about Best Buy’s long-term potential despite current market challenges.
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