Evercore adds Best Buy to Underperform list, Kroger on Outperform list

Investing.com -- Evercore ISI added Best Buy (NYSE: BBY) to its Underperform list while it added Kroger (NYSE: KR) to its outperform one, ahead of the both retailers fourth-quarter earnings report.

Best Buy faces continued market share losses in key categories like TVs and appliances. The brokerage expects Best Buy to guide to slight earnings growth in 2025 but sees pressures persisting, potentially limiting upside for the stock.

Evercore projects Best Buy to post fourth-quarter same-store sales down 1%, slightly better than consensus estimates, but warns that a cautious outlook for 2025 could weigh on shares.

“We believe a guide for slight earnings growth is more likely to push the stock towards $80, which is 13x than breakout towards $100 especially as share pressures persist,” analyst said on Best Buy.

The firm remains concerned about the retailer’s declining competitive position as Walmart (NYSE: WMT), Costco (NASDAQ: COST), Home Depot (NYSE: HD), and Lowe’s (NYSE: LOW) continue to gain share.

Conversely, Evercore highlighted Kroger’s potential for an 8-10% upside move following its earnings report on March 6.

The firm expects strong fourth-quarter results, boosted by the return of Express Scripts (ESI), and sees a favorable full-year guidance outlook.

Evercore believes Kroger’s defensive growth characteristics position it well in a challenging consumer environment, though competition from Walmart and Amazon (NASDAQ: AMZN) remains a key risk.

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