were falling after an analyst at BofA Securities said consumers will be prioritizing buying items they need this holiday season rather than what they might want, representing a headwind for the stock.
BofA Securities analyst Elizabeth Suzuki downgraded shares of
(ticker: BBY) to Underperform from Neutral and cut her 12-month price target on the stock to $69 from $80. Suzuki wrote in a research note Wednesday that spending has been weak for consumer electronics and it won’t get any better as the future of the economy and a possible recession remain unclear.
BofA been tracking spending through the holiday season and found that consumer electronics and hobby retail spending, specifically, declined more than 13% year over year in November. Suzuki expects “2023 to be another year where consumer spending gets prioritized toward ‘needs’ (food, fuel, maintenance and repair categories) and away from ‘wants’.” That would not bode well for Best Buy, which sells items like gaming systems, computers and televisions.
“We believe it [Best Buy] is in a strong position in core products and should have opportunities to expand into new categories going forward, although a medium-term pullback on discretionary retail categories presents a headwind to both sales growth and valuation,” Suzuki wrote.
Best Buy didn’t immediately respond to a request for comment from Barron’s.
Because of near-term concerns, the analyst lowered her earnings estimates for 2024 to $6.90 a share from $7.99 a share, and her estimates for 2025 to $7.92 a share from $8.97 a share for 2025.
Shares of Best Buy fell 2.2% Wednesday to $82.20. The stock has dropped 19% this year. The
was up 0.5% on Wednesday.
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