Best Buy shares are declining about 7% in the US morning trading on Tuesday after the electronics retailer said it anticipated sluggish sales growth in 3Q.
Best Buy (BBY) CFO Matt Bilunas expects “Q3 sales to be higher compared to last year but likely will not continue at the current quarter-to-date level of approximately 20% growth,” amid the ongoing uncertainty.
For the second quarter, Best Buy reported adjusted earnings of $1.71 per share, topping analysts’ estimates of $1.04 per share. Its 2Q revenues of $9.91 billion came ahead of the Street consensus of $9.73 billion. Both earnings and revenues grew 58% and 3.9%, respectively, on a year-over-year basis, driven by strong demand for its products and services. Domestic comparable online sales grew 242.2%.
Ahead of 2Q results, Raymond James analyst Matthew McClintock lifted the stock’s price target to $135 (15% upside potential) from $100 and maintained a Buy rating. He had forecasted “well above consensus” 2Q earnings of $1.22 per share with comparable sales rising 6%. The analyst expects the company to benefit growing demand for videogames, home theater, and mobile phones and sustained growth in tech-related spending in the second half of the year. (See BBY stock analysis on TipRanks).
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 8 Buys and 6 Holds. The average price target of $110 implies downside potential of about 6.3%, given the year-to-date share price gain of about 33.7%.
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