UBS Raises Price Target on Best Buy (BBY) Following Solid 2Q

UBS reiterated a Neutral rating on Best Buy (NYSE: BBY), and raised the price target to $38.00 (from $33.00), following the company's 2Q earnings report. Appliances comped up 8.2% and now represent 9% of BBY’s TTM sales. Also, its eComm growth of 24% was above the 20% mark for the second quarter in a row, showing it can hold its own through this channel.

Analyst Michael Lasser commented, "The narrative around BBY has been evolving, but this Q added credibility that it's on a sustainable turnaround. Its comp spread vs. the industry (as defined by NPD) widened to 400 bps. This marked a reversal from the diminishing gains over the last 2 Qs. The read is BBY’s path is more in its own control than the market gives it credit for since it only trades at 11x-12x our ’17 EPS. Though, we aren't sure it will ever get a premium valuation given the competitive intensity of the industry, commodity nature of the category, scale of price deflation of the products, & concentration of the vendor base. Though, BBY has repeatedly & consistently shown it isn’t being slowed by these factors."

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 $39.23 yesterday.

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