Investing

Earnings Previews: Best Buy, Palo Alto Networks and More

Best Buy

Consumer Electronics retailer Best Buy Co. Inc. (NYSE: BBY) reports fiscal second-quarter results before markets open on Tuesday. The past 12 months have not been especially good for Best Buy. The stock has added less than 2% and currently trades at the same level as in late October of last year, when the shares added nearly 19%. The share price has risen by almost 300% over the past five years, but Best Buy had better have an answer for the question of what it has done lately.

Analysts are mixed on the stock, with 14 of 29 rating the shares a Buy or Strong Buy. Twelve have given the stock a Hold rating. At a price of around $111.70, the stock’s implied gain to a median price target of $126 is 12.8%. At the high target of $150, the upside potential is 34.2%.

Second-quarter revenue is forecast at $11.54 billion, down less than 1% sequentially and up 17.5% year over year. EPS are expected to come in at $1.89, down 15% year over year and up 10.5% year over year. Current estimates for the full fiscal year call for EPS of $8.44, which would be 6.7% higher, and revenue of $49.34 billion, up about 4.4%.

The stock trades at 13.0 times expected 2022 EPS, 12.8 times estimated 2023 earnings times and 11.8 times estimated 2024 earnings. Best Buy’s 52-week trading range is $95.93 to $128.57, and the company pays an annual dividend of $2.80 (yield of 2.54%).

Medtronic

Medical device maker Medtronic PLC (NYSE: MDT) has posted a share price gain of around 32% over the past 12 months, including a year-to-date gain of nearly 12%. Demand for surgeries postponed last year due to the pandemic has boosted the company’s revenue this year. In the longer term, a robotic-assisted surgery system is already in use in Latin America, as Medtronic readies regulatory filings in other countries around the world.

Of 29 analysts covering the company, 23 rate the shares a Buy or Strong Buy and the rest have a Hold rating. At a price of around $129.60, the stock’s implied upside to a median price target of $140 is 8%. At the high target of $153, the upside potential is 18%.

For the fiscal first quarter ended in July, the company is expected to report revenue of $7.88 billion, down about 3.8% sequentially and up 21% year over year. The EPS forecast is $1.32, down nearly 12% sequentially but more than double last year’s quarterly total of $0.62. For the full 2022 fiscal year, analysts are forecasting EPS of $5.69, up 28%, and revenue of $33.2 billion, more than 10% higher.

The stock trades at 22.7 times expected 2022 EPS, 20.5 times estimated 2023 earnings and 18.9 times estimated 2024 earnings. The stock’s 52-week range is $98.44 to $132.39, and Medtronic pays an annual dividend of $2.52 (yield of 1.95%).