Mike Baker, Deutsche Bank (Buy; $36 PT)
"Estimates have come way down of course, and we are at $1.02 compared to consensus of $1.01. Our comp forecast is -1% domestically compared to a down 1.9% result for the holiday selling period, suggesting some improvement in January. We think there could be risk to that estimate. What retailer has had a better January? But we see less risk to the EPS estimate as the CFO has a track record of lowering the bar to a level that can be cleared. We think a somewhat soft January should not change the investment outlook. Buy."
Michael Pacter, Wedbush Securities (Underperform; $18 PT)
"Our target is based on an EV of 10x sustainable free cash flow, reflecting expected negative comps in 2014, further margin erosion, low visibility, lack of guidance, and doubts about the sustainability of Best Buy's turnaround plan. We expect comps declines to continue, and we expect price matching to continue to pressure margins. Lower margins could pressure Best Buy's cash flow multiple."Denise Chai, Bank of America Merrill Lynch (Buy; $34 PO) "We reiterate our Buy rating as we continue to see several key catalysts to price to earnings and share appreciation in 2014. In our view, the 34% decline in share price since holidays results in early January represent an overreaction to short term factors that have largely passed. We see three key catalysts to drive an acceleration in earnings including: 1) The beginnings of a true CE cycle led by 4K TV's; 2) New cost cutting targets following the completion of the current $750mn goal, likely announced in 1H14; and 3) the bottoming of aggressive promotional activity by WMT and AMZN. Our $34 PO is based on 13x the midpoint of our 2014-15 EPS estimates and represents upside potential of 35%." --Written by Laurie Kulikowski in New York. Follow @LKulikowski