UBS Maintains a 'Neutral' on Best Buy (BBY); Becoming Unencumbered...

UBS maintains a 'Neutral' on Best Buy (NYSE: BBY) price target raised $2 to $28.00.

UBS analyst says, "The form of BBY’s original relationship with CPW has run its course and it has to pay a heavy price to ameliorate itself from the contract. The cost was both explicit with a $1.3 billion payment to CPW and implicit as this capital could have been put to work buying back its shares. Ultimately, the return on this capital investment decision will depend on the value that BBY can derive from having its BBY Mobile business unencumbered by the need to share the profits with a partner."

"Based on the accretion from the CPW transactions, we are raising our FY’12 EPS estimate to $3.50 (from $3.45) and our FY’13 EPS estimate to $3.90 (from $3.55). We estimate that if the $1.3 b was spent on share repos in lieu of this arrangement, it could have delivered $0.60 of EPS accretion. We expect that BBY will still repurchase ~$1 billion shares per annum for the next few years."

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 $26.46 yesterday.

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