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[video] Is Best Buy's Stock Now a Buy? (Update 2)

Lasser noted the silver lining from the holiday season -- the cost-cutting acceleration combined with the revenue-generating opportunities will be closely watched by competitors like Amazon (AMZN) and Wal-Mart (WMT).

"We think part of the reason why the promotional environment was so tight was that other players like WMT and AMZN saw the progress that BBY was making in categories TVs and tablets and it motivated them to respond in kind over the holidays," Lasser wrote.

Goldman analyst Fassler also took a more "guarded view" on Best Buy.

Best Buy was added to Goldman's Buy List on July 3, 2013. Since then the stock has fallen 9% vs. a positive 14% return for the S&P 500, according to Fassler.

"We now expect BBY to trade at multiples characteristic of secularly challenged retailers, after having broken that mold for a time in 2H 2013, given the challenging realities of selling big-ticket commodities in a price transparent environment, hammered home by its 4Q showing," Fassler wrote in a research note. "The likely diminished contribution of highly profitable wireless growth and the cycling of Vizio as a key driver of TV share gains impair our confidence as we look forward."

"Management spoke to incremental cost cutting opportunities on its call, but we think the firm will be challenged to deliver superior customer experiences while slashing its cost structure," the note said. "We believe management has made smart decisions here, and is coping valiantly with tough positioning. Also, we realize that holiday is a bad time to judge the efficacy of emerging initiatives, so we model a much better showing in upcoming quarters."

Fassler cut his earnings forecasts by 62 cents to $1.01 a share for the fourth quarter and by 63 cents to $1.83 for the full year. For 2014, he cut forecasts by 61 cents to $2.35 per share.

TheStreet's Rocco Pendola disagrees with Best Buy analysts who are still relatively bullish, using Lasser's comment "We think the story has changed," as a prime example of how sell-side analysts confuse positive stock performance with their handle on a company's underlying story:

"Lasser and his other bullish colleagues got BBY right in 2013. But they were riding momentum. I'd like to think they're smart enough to realize this. That they know they weren't touting an investment in a solid company. They were just, partially as a result of their own collective day-after-day pumping, going with what was hot." - TheStreet's Rocco Pendola

Bank of America analyst Denise Chai upgraded the stock to "buy" on Friday.

"We view these problems are short-term in nature and at current levels, BBY still offers opportunity to investors who are willing to look through near-term weakness," Chai wrote in a note.

BBY ChartBBY data by YCharts

Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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