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.



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

rss feed

Latest Stories

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

article imageVMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years

REX Shares is launching two new VIX exchange-traded products on Tuesday in what is likely to be the most read on...

article imageThe April 29 Gold Triangle Breakout Update

If you’re just watching stocks, you may be missing this powerful Triangle Breakout surge in read on...

article imageSell In May, But It Is A Presidential Election Year

With May just around the corner, articles covering the "Sell in May' phenomenon are not in short supply and 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.