Join        Login             Stock Quote

Best Buy (BBY) Estimates, PT Cut By RBC Capital After Gloomy Outlook

 March 30, 2012 01:43 PM

RBC Capital Markets analyst Scot Ciccarelli lowered his price target on shares of Best Buy Co. Inc. (NYSE:BBY) to $27 from $28, while maintaining its "Sector Perform" rating.

The brokerage reduced its 2013 EPS estimate for Best Buy to $3.55 from $3.80 and its 2014 estimate to $3.75 from $4.17.

While Ciccarelli would continue to refine his model given the many moving pieces here, he believes there could be risk to our forecast for a gross margin decline given recent trends (although guidance is for flat gross margin percentage).

While the company exceeded expectations for fourth quarter, the analyst believes these results are being significantly overshadowed by the continued deterioration in the core business.

[Related -Best Buy BBY Teaches Us Four Steps to a Trend Reversal]

Despite substantial contributions from the closing of money losing businesses, acquiring the rest of CarPhone Warehouse, and newly-announced cost savings plans, EBIT is still expected to decline by 4% to 11% in fiscal 2013.

Most of the company's cost savings plans ($250 million for fiscal 2013; $800 million over the next 3 years) are being "re-invested" in the business, rather than flowing through to the bottom-line. An upward revaluation of the stock doesn't seem likely in the near-term, and the analyst would continue to avoid BBY despite yesterday's decline.

Following a 0.4% Domestic comp decline in December, Domestic comps came in at down 2.2%, implying a roughly 4% comp decline in the combined months of January/February. This deterioration has likely led to the company's guidance for a 2% to 4% comp decline for fiscal 2013 versus Ciccarelli's previous flattish estimate.

[Related -Sony Corporation: Top Black Friday Deals For PS3, Xbox 360]

Best Buy operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China.

BBY is trading down 2.79% at $24.08 on Friday.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageInitial Jobless Claims Rose Unexpectedly

Claims unexpectedly rose in the latest report through last weekend to breach 300,000 for the first time read on...

article imageAll Quiet on the Record High Front

What can we glean from the media’s lack of attention to the market’s recent record read on...

article imageThe Chip Maker Short Sellers Should Be Watching

Investing in semiconductor stocks is always tricky. Industry cycles can lead to bumps in the road for the read on...

article imageChicago Fed: US Economic Growth Slowed In October

The pace of US growth slowed more than expected in October, according to this morning’s update of the read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

A Pause In The Action
More Articles on: Retail/Wholesale

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.