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Market Preview: Holding Out for a 'Grand Bargain'

UBS said it's expecting Best Buy to promote a smaller assortment of products on Black Friday this year but with higher discounts.

"Our detailed analysis of BBY's Black Friday shows that across Computers, HDTVs, Cameras and Appliances company reduced the number of featured products from 143 items last year to 61 items this year," the firm said. "However, the discounts are greater this year. Interestingly, only 3 HDTVs are discounted vs. 29 last year. As a reminder, BBY's domestic GM declined by 40 bps during last year's 4Q due to promotional small and mid-sized TVs increasing as a mix of sales."

UBS expects trading in Best Buy shares to be choppy until the market gets more clarity about whether Schulze will be able to attract investor support for his go-private bid and how the holiday season is shaping up.

"The volatility is likely to persist, but it appears the shares are approaching a near-term floor," the firm said. "Our new $14.50 PT equates to 5x our CY'13E EPS (based on DCF/multiple blend)."

The other big morning report is Dow component Hewlett-Packard (HPQ - Get Report), which is reporting its fiscal fourth-quarter results. The average estimate of analysts polled by Thomson Reuters is for a profit of $1.14 a share in the October-ended period on revenue of $30.43 billion.

Last week's poor numbers from Dell (DELL) prompted a fresh exodus out of HP shares, which are now down more than 48% year-to-date. The Dow component's problems are well known as CEO Meg Whitman has found been gamely trying to reorganize the top PC maker just as the macro environment has turned sour.

Sterne Agee has a neutral rating on the stock, and the firm is projecting the top line could be a bit light.

"Based on our supply chain work, we anticipate light revenue but a meet or beat on EPS due to cost controls," the firm said. "For its outlook, we anticipate the company to reiterate its recently lowered guidance range of $3.40-$3.60 in EPS for FY13 vs. consensus at $3.52. With DELL, INTC, and MSFT giving disappointing comments on PC demand, investor expectations are fairly low."

The majority of the sell side is on board with Sterne Agee's skepticism as 27 of the 33 analysts covering HP are at either hold (19), underperform (6) or sell (2).

Check out TheStreet's quote page for Hewlett-Packard for year-to-date share performance, analyst ratings, earnings estimates and much more.
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