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Investing.com -- Piper Sandler downgraded Best Buy Co (NYSE:BBY). to Neutral from Overweight and cut its price target to $75, warning that the U.S. electronics retailer is unlikely to deliver meaningful growth in the coming quarters as appliance and TV sales continue to lag.
The brokerage said it sees no clear drivers to lift comparable sales or earnings in the near term.
Appliance sales, roughly 12% of revenue, have underperformed larger rivals such as Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) over the past five years, while Costco (NASDAQ:COST) has stepped up pressure with more aggressive service offerings.
Best Buy’s TV business, which accounts for 15% to 20% of sales, also remains under strain amid weak demand and limited product innovation.
Piper flagged a new threat from Walmart’s acquisition of Vizio, saying the deal could allow Walmart (NYSE:WMT) to undercut prices or bundle TVs with memberships, reshaping the economics of the category.
Analysts also cast doubt on whether Microsoft’s planned end-of-support for Windows 10 in October will drive a material uptick in PC sales, noting that many consumers have already upgraded or will do so at no cost.
While the firm noted some encouraging signs from Best Buy’s nascent third-party marketplace and advertising push, it said those efforts are unlikely to offset broader category declines or competitive headwinds in the short term.
The revised $75 target price implies about 11.5 times Best Buy’s projected fiscal 2027 earnings.