Morgan Stanley Expects Holiday Boost on Best Buy (BBY) Following Industry Slowdown; Reiterates Overweight
Morgan Stanley reiterated an Overweight rating on Best Buy (NYSE: BBY), and cut the price target to $37.00 (from $40.00), following the company's 3Q earnings report. EPS came in at $0.41, $0.06 better than consensus. Earnings quality was subpar as gross margin was unexpectedly helped by quasi-temporary warranty payments of 30 bps. Morgan Stanley expects a sales bounce back in the consumer electronics category during the holidays.
Analyst Simeon Gutman commented, "BBY doing all the right things, but can’t escape an industry
slowdown. Street may question if Q4 bar set low enough; we expect holiday sales resurgence and outperformance."
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Shares of Best Buy closed at $30.67 yesterday.