US stock futures flounder amid tech weakness, Fed caution
On Wednesday, Telsey Advisory Group adjusted its price target for Best Buy shares (NYSE:BBY), reducing it to $100 from the previous $110 while maintaining an Outperform rating. The firm’s analyst, Joseph Feldman, cited concerns over the impact of tariffs on the company’s performance. The stock has experienced significant pressure recently, with a -16.82% decline over the past week and currently trading at $75.20. According to InvestingPro analysis, Best Buy appears undervalued based on its Fair Value calculations, with analyst targets ranging from $75 to $115. Despite these concerns, Feldman believes that Best Buy is positioned to effectively manage costs and remain a leader in the consumer electronics industry.
Best Buy has recently discussed new initiatives during its fourth-quarter 2024 earnings call, which includes the mid-year launch of its Best Buy Marketplace in the United States. This online platform is expected to add a profitable revenue stream by hosting third-party sellers. The company also plans to enhance its Best Buy Ads advertising business and capitalize on data through its growing membership program.
Innovation continues to be a strong point for Best Buy, particularly with advancements in generative artificial intelligence (GenAI). The company is also seeing a renewal in product demand due to the replacement cycle for items bought between 2019 and 2020. Telsey anticipates that Best Buy will experience a slight increase in comparable sales and earnings growth in 2025, with more significant growth projected for 2026.
Despite maintaining a positive outlook, the revised price target reflects a lower price-to-earnings (P/E) multiple of approximately 15x, down from 16x. This adjustment is based on Telsey’s updated 2025 earnings per share (EPS) estimate for Best Buy, which has been lowered to $6.44 from $6.70. The reduced P/E multiple and EPS estimate are a reflection of the increased risks associated with tariffs, according to Feldman’s analysis. Currently trading at a P/E ratio of 20.27x, the stock’s valuation metrics and detailed financial analysis are available through InvestingPro’s comprehensive research reports, which provide in-depth analysis of 1,400+ top US stocks.
In other recent news, Best Buy has reported its fourth-quarter earnings for fiscal year 2025, surpassing analyst expectations with an earnings per share (EPS) of $2.58, compared to the forecast of $2.39. Revenue for the quarter reached $13.9 billion, marking a 0.5% growth in comparable sales, driven by strong digital and computing sales. Despite these positive results, several analyst firms have adjusted their price targets for Best Buy. Evercore ISI reduced its target to $80, maintaining an In Line rating, due to ongoing competitive pressures and potential tariff impacts. Citi also lowered its price target to $93, while maintaining a Buy rating, citing concerns over tariffs and their uncertain impact on Best Buy’s future performance. DA Davidson adjusted its target to $110, acknowledging Best Buy’s strong financial performance and growth in critical segments like laptops. Jefferies set a new target of $92, while maintaining a Buy rating, noting the company’s positive comparable sales for the first time in over three years. These recent developments highlight Best Buy’s ability to navigate a challenging retail environment, though concerns over tariffs and market conditions remain prevalent among analysts.
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