Best Buy (BBY) Momentum Building Into Q4 - BofA/Merrill Lynch
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BofA/Merrill Lynch analyst Denise Chai reiterated a Buy rating and $36 price target on Best Buy (NYSE: BBY) following the Q1 EPS beat. The firm said momentum is building into Q4.
Chai called Q1 "another quarter of strong execution and cost reductions ($860mn since 1Q13) and substantial progress on initiatives such as ship from store." With no major product launches, Q2 and Q3 industry and product trends are expected to be muted. That said, they "expect an improvement in 4Q and more importantly, we believe BBY is increasingly well positioned to accelerate EPS growth. This is based on: This is based on: 1) a huge improvement in online capabilities including ship from store which will greatly improve inventory availability, efficiency and delivery speed; 2) the ability to sell returned and open box merchandise online; 3) better mobile sales as installment billing fully rolled out (BBY will be the only retailer offering this for all carriers), 4) Upside from an underappreciated 4k TV cycle and the launch of new 4K partnerships with Samsung and Sony; 5) Greater flow through of Renew Blue cost savings; and 6) the rollout of Athena."
Shares of Best Buy closed at $25.35 yesterday.
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