Best Buy Is Down By 3%, Here Is Why

Key Insights

• Barclays downgrades Best Buy after analysing its recent earnings report. 

• Retailers’ stocks remain under pressure after disappointing reports from Walmart and Target. 

• Best Buy is trading at just 7 forward P/E, so the stock could be attractive for speculative traders who are willing to bet that the recent sell-off was not justified. 

Best Buy Falls After Analyst Downgrade

Shares of Best Buy found themselves under pressure after Barclays cut its rating for the stock after the first-quarter report, which was released on May 24.

Best Buy reported revenue of $10.65 billion and adjusted earnings of $1.57 per share, beating analyst estimates on both earnings and revenue. Comparable sales declined by 8.0%, but the report did not put additional pressure on the stock as it has already declined by about 25% in several weeks.

The recent weeks have been challenging for retail stocks. Leaders like Walmart and Target suffered heavy losses, creating significant pressure on the whole segment. The analyst downgrade served as an additional bearish catalyst for Best Buy stock and pushed it closer to yearly lows.

What’s Next For Best Buy Stock?

Analyst estimates for Best Buy have been moving lower in recent months. Currently, the company is expected to report earnings of $8.86 per share in the current year and earnings of $10.35 per share in the next year, so the stock is trading at just 7 forward P/E.

While current valuation levels look cheap, analyst estimates may remain under pressure if analysts see signs of economic problems. The recent reports from retailers highlighted current challenges, and it remains to be seen whether the second-quarter reports will be better.

At the same time, it should be noted that current valuation could be attractive for speculative traders who are ready to bet that Best Buy stock can rebound after losing more than 25% of its value since the start of this year.

To keep up with the latest earnings updates, visit our earnings calendar.

This article was originally posted on FX Empire

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