Best Buy shares are declining about 7% in the US morning trading on Tuesday after the electronics retailer said it anticipated sluggish sales growth in 3Q.
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Best Buy (BBY) CFO Matt Bilunas expects “Q3 sales to be higher compared to last year but likely will not continue at the current quarter-to-date level of approximately 20% growth,” amid the ongoing uncertainty.
For the second quarter, Best Buy reported adjusted earnings of $1.71 per share, topping analysts’ estimates of $1.04 per share. Its 2Q revenues of $9.91 billion came ahead of the Street consensus of $9.73 billion. Both earnings and revenues grew 58% and 3.9%, respectively, on a year-over-year basis, driven by strong demand for its products and services. Domestic comparable online sales grew 242.2%.
Ahead of 2Q results, Raymond James analyst Matthew McClintock lifted the stock’s price target to $135 (15% upside potential) from $100 and maintained a Buy rating. He had forecasted “well above consensus” 2Q earnings of $1.22 per share with comparable sales rising 6%. The analyst expects the company to benefit growing demand for videogames, home theater, and mobile phones and sustained growth in tech-related spending in the second half of the year. (See BBY stock analysis on TipRanks).
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 8 Buys and 6 Holds. The average price target of $110 implies downside potential of about 6.3%, given the year-to-date share price gain of about 33.7%.
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