There are distressing signs about the upcoming holiday shopping season, and some of them are coming from electronics retailer Best Buy (BBY). However, there are also some positive signs and investors appear to have stuck to the positives, sending shares up nearly 2%.
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One of the biggest problems Best Buy is noticing, according to reports, is that consumers are not taking to online shopping very well. Best Buy is helped by nostalgia, as people remember the thrill of looking for that special DVD, or a particular video game. Streaming video and digital distribution has left physical media as something of a relic, and that has hurt Best Buy and its stock.
The company’s third quarter earnings report also demonstrated some key issues as sales fell across the board. Comparable sales for the U.S. were down nearly 3%, with consumer electronics down 6%, appliances down 15%, and entertainment down about 19%. With customers increasingly “waiting for deals and sales” in the face of inflation and larger economic concerns, it’s harming Best Buy.
Don’t Give Up, Says Cramer
Support for BBY stock comes from Jim Cramer, notorious CNBC host, who declared now was not the time to give up hope on Best Buy. The company was “looking up” going into the end of November, and with the holidays coming, certainly some shoppers will change their mind on waiting to land that nifty new gadget, whether for themselves or as a gift.
While artificial intelligence (AI) personal computers (AI PCs) have not been a big hit yet, these are likely to gain ground as time goes on, Cramer adds. And with Black Friday sales already looking peachy, that is a good sign.
Is Best Buy Stock a Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BBY stock based on nine Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 27.82% rally in its share price over the past year, the average BBY price target of $102 implies 11.35% upside potential.
