© Reuters. Best Buy (BBY) upgraded at JPMorgan as deflationary headwinds should moderate
Best Buy (NYSE:) was upgraded to Overweight from Neutral at JPMorgan on Friday, with the firm raising its price target for the stock to $101 from $89 per share.
The move represents the second upgrade for the stock in a week after Telsey upgraded Best Buy from Market Perform to Outperform with a price target of $95, up from $85 on Wednesday.
JPMorgan provided four reasons for its upgrade. The first is that analysts believe the share of wallet pull-forward in computing (~25% of sales), TVs (25%), and appliances (14%) is at, or nearing an end, “with a higher installed based of electronics nationally supporting a soft landing this year.”
Furthermore, the firm believes deflationary headwinds in these categories should moderate in the second half of 2024, with improving unit growth dynamics.
“We believe BBY’s margin outlook is conservative (both GM and SG&A) with long-term margins well off their potential (4.1% vs. 4.9% pre-COVID and 6.0% peak) while Consensus Metrix comp estimates for 2024 (-1%) and 2025 (+2.6%) appear achievable,” added JPMorgan.
