Time for Best Buy (BBY) to Dump International Businesses

November 21, 2012 9:21 AM EST
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Price: $43.83 -0.9%

Rating Summary:
    7 Buy, 17 Hold, 5 Sell

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Regardless of whether Best Buy (NYSE: BBY) goes private or not, analysts at Jefferies think its businesses in China and Europe will ultimately be sold since they lack a strategic fit and offer poor ROI.

If a deal is done, analysts thinks the units Europe and China could be worth $900 million to $1 billion, or $3 per share. For those who are counting, that's about 25 percent of its current market cap.

"The international business has become a meaningful drag on profitability in FY13 and while there may be some merits to having exposure to overseas, we have long felt the distractions outweigh the benefits," said analyst Daniel Binder.

Binder thinks sales of its China and Europe business will make Best Buy more attractive to private equity, which could help interested parties, including former Chairman Schulze, finally nail down a deal.

Binder thinks BBY will hold on to businesses in Canada and Mexico.

Jefferies has a Hold rating on Best Buy with a revised price target of $13.00 (from $18.00).

For an analyst ratings summary and ratings history on Best Buy click here. For more ratings news on Best Buy click here.

Shares of Best Buy closed at $11.96 yesterday.

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