By Michael Elkins
Telsey Advisory Group downgraded Best Buy (NYSE:BBY) to a Market Perform rating (From Outperform) and cut the price target on the stock to $83.00 (From $88.00) ahead of the company’s 4Q earnings report. The electronics retailer is expected to report results on Thursday, March 2.
Analysts wrote in a note, “In the near term, we believe Best Buy's business is likely to experience a further decline related to the challenging macro trends weighing on discretionary consumer demand, given high inflation and rising interest rates—resulting in our lower 2023 forecasts for both sales and profits. Our updated view also incorporates the disappointing outlook provided by other retailers, including Home Depot and Walmart.”
Telsey projects BBY to report 4Q22 EPS of $2.12, just above the consensus of $2.11. They estimate a sales decline of 10.6% to $14.6B, with a total comp of (10.0%) vs. consensus at (9.4%) and the guidance of ~(10.0%).
For 2023, Telsey forecasts EPS of $6.84 vs. $7.27 previously vs. the consensus of $6.73, with a lower total comp of (1.4%) vs. 0.5% previously and a consensus of (1.5%).
Analysts continue in the note, “In the long term, we continue to expect Best Buy to remain one of the better operators in retail, with a differentiated store and digital experience, efficient operations, solid cash flow generation, and strong management team. The company also continues to make progress on key initiatives such as Total Tech and health.”
Shares of BBY are down 1.86% in pre-market trading on Monday.