UBS Maintains a 'Neutral' on Best Buy (BBY); Another One for the Skeptics

UBS maintains a 'Neutral' on Best Buy (NYSE: BBY) price target cut from $28 to $25.

UBS analyst says, "While BBY was able to drive a positive domestic 3Q comp (with a 0.9% increase), the price was far greater than most expected as this segment’s gross margin declined 130 bps. These results reflect the deep competitive and cyclical challenges that are pressuring BBY’s profit pools. There is no easy answer to address these issues. Until BBY outlines a more cohesive vision and provides some evidence of success against that plan, the stock is likely to trade at a discounted valuation."

"There were some silver linings from BBY’s third quarter like its domestic SG&A leverage of 10 bps, solid performance from the international segment (EBIT grew 81%) and tight inventory control (with a domestic comp inventory decline of 11%). Also, BBY reiterated its previous EPS guidance of $3.35 to $3.65."

UBS cuts FY12 EPS estimate from $3.52 to $3.45 and FY13 from $3.93 to $3.80.

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 $23.73 yesterday.

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