Research Call: Best Buy Bottomed Out (BBY, RSH, AMZN)
Best Buy Co. Inc. (NYSE: BBY) may have finally seen the bottom. That is at least what one analyst is calling today. Today’s rating change shows an upgrade at Citigroup to “Neutral” from a dire “Sell” rating. This may not…
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Still, Best Buy has been a battered and tattered story. In some arguments, it might even be in worse shape than the smaller rival RadioShack Corporation (NYSE: RSH). Just yesterday came a report from Fitch evaluating Best Buy buyout rumors. Oddly enough, that report was around the possibility of the founder Schulze stepping in to make a go-private offer.
What Citi’s upgrade contained today is a target price upgrade as well to $21 from $18 on the down and out shares.It called the valuation as being near a trough and with only limited downside in the near-term as TV price declines are slowing down. Long-term issues remain a risk and Citi actually only sees the chance of a buyout as being under 20%.
We would warn that ‘valuation upgrades’ are often the most dangerous sort of upgrades. Best Buy effectively has a management gap right now and the stores are perhaps the best advertising that Amazon.com Inc. (NASDAQ: AMZN) and other online retailers could have asked for. That is not likely to change any time soon.
Best Buy’s stock is up 2.2% at $19.84 today and the 52-week range is $17.53 to $32.85; keep in mind that this stock was north of $45 as recently as the start of 2010. Its shares have also slid from over $27 to under $18 over just the last three months before this most recent recovery attempt.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
