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.