A day after Best Buy Co Inc (NYSE: BBY) trimmed its outlook both for the current fiscal quarter as well as the full year, a Jefferies analyst says his “overweight” rating on the Best Buy stock is no longer justified.
Best Buy stock downgraded at Jefferies
Last night, the consumer electronics retailer blamed inflation for weakening demand and said it now sees a wider 13% decline in same-store sales this quarter. The multinational also announced a pause in share repurchase on Wednesday.
Consequently, Jonathan Matuszewski downgraded the Best Buy stock this morning to “hold” and lowered his price target to $71 a share that translates to another 9.0% downside from here. The analyst wrote:
Initiatives to drive market share and profits likely to be overshadowed by a softer macro. A discretionary goods recession is here. Stock is about 50% off highs, but an ongoing pivot away from discretionary stocks is not over.
Citi reiterates sell rating on the Best Buy stock
For the full financial year, the NYSE-listed retailer now warns of an 11% hit to same-store sales versus up to 6.0% it had forecast in May.
Also on Thursday, Citi analyst Steven Zaccone reiterated his “sell” rating on the Best Buy stock and said:
The path forward is getting more challenging based on macro backdrop and trajectory the next few years is increasingly bleak. We’re concerned an impending recession will hinder the ability to invest in strategic initiatives outlined at the analyst day.
He sees a much steeper decline to $59 a share. Despite the stock market news, shares are in the green on Thursday.
Best Buy is expected to report its Q2 results in the final week of August.