Is Best Buy Picking Up Steam?

Best Buy (BBY) shares are gaining ground Wednesday following upbeat comments on the electronics retailer from Piper Jaffray analyst Mitchell Kaiser.

Kaiser Wednesday repeated his Overweight rating on the stock, lifting his price target to $50, from $42. He also raised his EPS estimate for the February 2010 fiscal year to $2.94, from $2.80; for FY 2011 he goes to $3.30, from $3.13.

Kaiser writes in a research notes that comp store sales are improving: he now sees FY Q2 comps down 4.8%, while the Street sees a 6.1% drop. He expects August quarter EPS of 44 cents, ahead of the Street at 40 cents. “We have confidence in our increased Q2 estimates as our checks indicate an accelerating comp trend as the quarter progressed, driven by strength in mobile phones, computing and flat panel TVs,” he writes. Kaiser thinks market share has improved from Q1, “helping to offset much of the broader industry weakness.”\

The Piper analyst expects the company to boost its guidance for FY 2010 above the current range of $2.50-$2.90 that was set in March. (His own estimate is $2.94.)

BBY Wednesday is up $1.23, or 3.4%, to $37.32.

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Comments

[PastTense:]

While it is true that Best Buy has gained because of the bankruptcy of a major competitor (Circuit City) I don't think Best Buy is particularly competitive compared to the discount stores (Walmart, especially) and the wholesale clubs (Costco, Sam's Club) on one hand and online sources (like Amazon) on the other.

I know that I personally always used to first head toward Best Buy for consumer electronics purchases--but haven't bought anything in one for years--instead buying consumer electronics either online or at Walmart.

Sep 02 11:05 PM

[Rwong8200:]

The CE business is going to be terrible for a while. Digital transistion pushed sales into June. Do not expect recovery for some time Oct-Nov. Laptop, Mp3, BluRay prices are all down double digits. TV prices are down 15%. No new game consoles, even some expected hit games are delayed. Price surveys show BB is very competitive.
Finally lots of money was spent on $600 stimulus last year in CE. Not there this year. Cash for Refrigerators is only $300M no significant impact there. Amazon I think is a better bet. BB has picked up CC 40% share other wise it would be dismal.

Sep 03 08:35 AM

[whisperonth...:]

Best Buy needs to work on their customer service. I purchased a brand new computer there a while back, and had all the bells and whistles installed, plus I purchased the 2 year warranty. The computer was complete by the following day, and I brought it home. The hard drive crashed 6 months later, and when I took it in for service, it took a week for them to "restore" the hard drive on a new hard drive. Considering that they already had the money for the computer and the warranty, I could only assume they were treating me as a "freebie" customer, one who did not have to pay for the current service. True, although I had paid in advance for the warranty. I questioned this, but they never could seem to explain the difference in a full new computer (with nothing on it) being completely ready within 2 days, all current updates installed, and a hard drive restore only. Somehow, I failed to see where that process would take 5 extra days, since installing a hard drive only takes a few minutes.

Best Buy has seen the last of my money. I don't want their products and I don't want their stock.

Sep 03 10:00 AM

[cdivia:]

I have had a battle with best buy over warranties. the once tried to tell me that if i bought a new flat screen and it broke within a year i was 'stuck', because it was new technology and that meant i took a risk. Not. There is a warranty of merchantability Built Into state law. And it usually also states specifically that store or vender claims to the contrary can Not supercede it. It you buy a product it should work. Period. If it does not, if it breaks and it is not your fault they are responsible. Period. Of course no store it going to tell you that exists in state commercial codes because they want you to purchase their warranties and deal with them on their terms.
cdivia

Sep 05 06:01 AM