JPMorgan Reiterates Overweight Rating on Best Buy (BBY), Adding it to Analyst Focus List

JPMorgan analyst Christopher Horvers reiterated an Overweight rating and $111.00 price target on Best Buy (NYSE: BBY).

The analyst said: "We hosted meetings with BBY management in Boston including CEO Corie Barry, Senior EVP of Enterprise Strategy & CFO Matt Bilunas, and VP of Investor Relations Mollie O’Brien. We upgraded the stock in February and are now adding it to JPM’s Analyst Focus List as a Value idea as we believe investors under-appreciate how punitive the cycle has been the past few years post- COVID, the degree of replacement demand that exists/will build, the innovation level in computing (driving an S-curve type adoption ahead), and the potential for key categories (e.g., TVs 25%e of the mix and appliances 13%) to inflect in a positive existing home sales environment. Moreover, the profitability of the model escalates when these categories work given richer margins and higher potential warranty and membership attachments, along with BBY’s ongoing efficiency efforts (and it’s a lower margin business so a lot of EPS torque). Ultimately, while investors are rightfully focused on the lower-risk high-cyclical plays (e.g., OW- rated HD and LOW, see our upgrade on the latter from earlier this year), we believe BBY sits in investors’ blind spot with replacement demand rising in 2025 given further time from the start of COVID, new computing technology in its early stages, and the sensitivity of TVs/appliances to housing turnover. We also note that vendors need BBY, an important endorsement for quality investors looking for higher beta names with cyclical upside."

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 $100.00 yesterday.

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