Goldman Sachs Reinstates Best Buy (BBY) at Neutral, Sees a Dividend Hike
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Price: $85.89 +0.19%
Rating Summary:
7 Buy, 25 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
7 Buy, 25 Hold, 5 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Goldman Sachs reinstate coverage on Best Buy (NYSE: BBY) with a Neutral rating and $28 price target.
The firm said their thesis reflects two challenges: (1) Price transparency directly impacts consumer electronics retailing, putting secular pressure on gross margin. (2) Electronics sales are lagging most other consumer segments.
Despite challenges, the firm sees the potential for improved capital allocation given that Best Buy operates with a payout ratio of just 19.7%. The firm believes the company can sustain a higher payout and model a 50% increase in BBY's dividend.
Goldman also notes shares trade at the lowest 2012 P/E in our coverage, the lowest EV/EBITDA multiple (market cap of $1 billion-plus), and the highest FCF yield on 2012 forecasts.
They raised FY13 EPS from $3.30 to $3.60 and FY14 from $3.53 to $3.67.
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 $26.12 yesterday.
The firm said their thesis reflects two challenges: (1) Price transparency directly impacts consumer electronics retailing, putting secular pressure on gross margin. (2) Electronics sales are lagging most other consumer segments.
Despite challenges, the firm sees the potential for improved capital allocation given that Best Buy operates with a payout ratio of just 19.7%. The firm believes the company can sustain a higher payout and model a 50% increase in BBY's dividend.
Goldman also notes shares trade at the lowest 2012 P/E in our coverage, the lowest EV/EBITDA multiple (market cap of $1 billion-plus), and the highest FCF yield on 2012 forecasts.
They raised FY13 EPS from $3.30 to $3.60 and FY14 from $3.53 to $3.67.
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 $26.12 yesterday.
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