Best Buy Shares Rise After Q1 Earnings Top Estimates; Target Price $150 in Best Case

Best Buy shares rose about 3% in pre-market trading on Thursday after the Richfield, Minnesota consumer electronics retailer reported better-than-expected earnings and lifted its annual sales forecast.

The company said domestic revenue increased 37.0% to $10.84 billion, largely driven by comparable sales growth of 37.9%, which was partially offset by the loss of revenue from permanent store closures in the past year. The was higher than the Wall Street consensus estimates of about $10.44 billion.

The U.S. retailer reported earnings per share of $2.23 per share, beating the market expectations of $1.34 per share.

Best Buy forecasts comparable sales growth of 3% to 6%, which compares to the prior outlook of -2%) to 1%. In the second quarter, comparable sales growth is expected to grow by nearly 17%.

Following this, Best Buy shares rose about 3% to $120.41 on Thursday. The stock rose over 17% so far this year.

Best Buy Stock Price Forecast

Eight analysts who offered stock ratings for Best Buy in the last three months forecast the average price in 12 months of $123.63 with a high forecast of $150.00 and a low forecast of $86.00.

The average price target represents a 2.37% increase from the last price of $120.77. Of those eight analysts, three rated “Buy”, four rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $115 with a high of $145 under a bull scenario and $82 under the worst-case scenario. The firm gave an “Equal-weight” rating on the consumer electronics retailer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $118 from $113. Raymond James upped the target price to $130 from $120. UBS lifted the target price to $130 from $120.

Analyst Comments

“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. BBY’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labor management, supply chain and omnichannel underpin our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We think 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 BBY’s strong track record in this arena.”

Check out FX Empire’s earnings calendar