Best Buy Shares Jump Despite Disappointing Q4 Show

Best Buy shares rose nearly 6% in pre-market trading on Thursday despite the Richfield, Minnesota consumer electronics retailer reporting lower-than-expected earnings in the holiday quarter and expecting disappointing revenue for the year.

The top U.S. electronics retailer reported quarterly adjusted earnings of $2.73​​ per share, missing the Wall Street consensus estimates of $2.81 per share. The company’s revenue declined over 3% to $16.37 billion from a year earlier. That was also missed analysts’ expectations of $16.59 billion.

For fiscal 2023, earnings per share were forecast to be between $8.85 and $9.15, below analysts’ estimates for $9.16. Comparable sales decreased 2.3% in the fourth quarter, bigger than analysts’ expectations for a 0.2% decline, Reuters reported.

Best Buy anticipates fiscal 2025 revenue of $53.5 billion to $56.5 billion, a substantial increase over the estimate of $53.51 billion. Revenue for fiscal 2021 was $51.76 billion.

Best Buy stock rose 5.85% higher at $106.74 in pre-market trading on Thursday. The stock fell nearly 1% so far this year after gaining about 2% in 2021.

Executives Comments

“The year has clearly started out much stronger than we originally expected. The sales momentum is continuing into Q2 and we are raising our annual comparable sales growth outlook. As we think about the back half of this year, we expect shopping behaviour will evolve as customers are able to spend more time on activities like eating out, travelling and other events,” Best Buy CFO Matt Bilunas said in the press release.

“It is difficult to know exactly how that impacts our business, especially as we lap particularly strong sales in the back half of last year. Therefore, at this time, we are leaving our original FY22 back-half sales assumptions unchanged.”

Analyst Comments

“Best Buy (BBY) is a best-in-class retailer led by a capable management team, and we are positive on the longer-term opportunity for the business and stock. Best Buy’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labour management, supply chain and omni-channel underpin our view,”

“We think Best Buy (BBY) can sustain >5% EBIT margins after pulling forward its margin target by 5 years during the COVID-19 pandemic. This is reliant on generating SG&A efficiencies, which we believe are possible given Best Buy’s (BBY) strong track record in this arena.”

Best Buy Stock Price Forecast

Ten analysts who offered stock ratings for Best Buy in the last three months forecast the average price in 12 months of $116.40 with a high forecast of $147.00 and a low forecast of $87.00.

The average price target represents a 15.43% change from the last price of $100.84. Of those ten analysts, five rated “Buy”, four rated “Hold”, while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $110 with a high of $140 under a bull scenario and $70 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the consumer electronics retailer’s stock.

Several analysts have also updated their stock outlook. BofA Global Research lowered the price objective to $147 from $175. Raymond James cut the target price to $105 from $135. Citigroup slashed the price target to $87 from $90.

Technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator gives a strong selling opportunity.

Check out FX Empire’s earnings calendar