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Best Buy Hits Two-Year High as Joly Forges Turnaround

This story has been updated from 11:39 am EDT with closing stock prices.

NEW YORK (TheStreet) -- Best Buy (BBY) surged Monday, hitting a two-year high after Credit Suisse restarted coverage of the stock with the equivalent of a "buy."

Credit Suisse analyst Gary Balter resumed coverage of the electronics retailer, rating the stock "outperform" while raising his 12-month price target by $8 to $40.

"Best Buy shares offer the most upside amongst so-called hardline retailers (companies that sell things like appliances, electronics and furniture), due to the steps CEO Hubert Joly and executive management are taking to turnaround the company, including its cost-savings initiative as well as revamping its online channel (which includes creating a better "omnichannel" experience) and, most importantly, creating stores within its store with partnerships with Microsoft (MSFT) and Samsung, Balter wrote Monday in a research note.

Best Buy reached the highest level since July 2011, and has gained more than 150% this year. That compares with the 13% year-to-date increase for the S&P 500. More than 11.7 million shares traded hands on Monday, above the stock's three-month daily trading average of 8.3 million shares.

"We believe [the stock] leaves plenty of upside, although, much as Rome was not built in a day (nor the Second Avenue subway line), this is a multi-year effort, one with costs initially to potentially reap the rewards longer term," Balter wrote.

Also see: Best Buy Turnaround Plans Solidify With Windows Store

Including Balter, just under half of the 29 sell-side analysts who cover the stock rate the company at a buy or buy-equivalent rating, according to Bloomberg data.

Also see: Best Buy's New Life After Takeover Trauma

Balter wrote he believes that Best Buy has the same potential as other turnaround names, including PetSmart (PETM), Tractor Supply (TSCO), Pier One Imports (PIR), Home Depot (HD) and ULTA (ULTA) where "a management change led to those stocks rising multifold, in some cases over 10 times their starting price."

"If there is one line to describe the change, it is that BBY is turning its store base from a cost liability to an offensive weapon, part of its multi-fanged distribution approach to customer satisfaction," the note said.

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