Citi Cuts Best Buy (BBY) to Sell, Slashes PT 25%; Sees Continuing Downside Despite Pullback

Citigroup analyst Kate McShane cut shares of Best Buy (NYSE: BBY) from Hold to Sell, while slashing her price target from $36 to $27, as the company posted a weak outlook for the fiscal year.

McShane said there is continuing downside pressure in the stock despite the pullback in recent weeks. She added inventories are too high, up 7.5 percent when they should be down by 4 percent based on historical trends.

"Mounting pressure from alternative channels will likely continue to pressure pricing. Critically, BBY is struggling to retain market share gains experienced after the bankruptcy of Circuit City, as other retail channels have stepped up [consumer electronics] product assortments and pricing. In particular, significant pressure has come from mass discounters and online retailers given favorable positioning in a commoditizing product channel."

Shares of Best Buy are down 4.31 percent to $28.83 in midday market movement on Friday.

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