Best Buy Shares Upgraded at Telsey on Shift to Work-From-Home Trend

Best Buy was upgraded to outperform at Telsey, which says the retailer benefits from the work-at-home trend and the spending shift to home-related items.
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Best Buy  (BBY) - Get Report shares on Monday rose after Telsey analyst Joseph Feldman upgraded the electronics retailer to outperform from market perform and raised his price target on the shares 25% to $90 from $72.

Best Buy stands to gain from the “work-from-home trend, which will likely be here for a while, and the shift in spending toward home-related items, including electronics,” he wrote in a report cited by Bloomberg.

Best Buy has kept about 70% of its 2019 sales level during the period of store closures caused by the coronavirus pandemic, Feldman noted. That performance is “quite solid,” he said.

A new gaming console that is expected to start selling later this year also should give the company a boost, Feldman said.

He sees Best Buy expanding its market share by offering more services, such as in-home advisers; by acquiring new customers as it participates in new business areas, including health; and by offering new payment options, such as lease-to-own online.

Morningstar analyst R.J. Hottovy sees many of the same positives going forward.

Best Buy's "in-home advisory, total tech support, and health-care services will rebound solidly during the covid-19 recovery period and [we] expect 2.5%to 3% average annual revenue growth and operating margins around 5% from fiscal 2022-2025,” he wrote in a report last month.

Best Buy is scheduled to report earnings on Thursday.

Its shares recently traded at $87, up 11%. The stock has eased 3% over the past three months. That compares with a 12% skid for the S&P 500 index.