Best Buy (NASDAQ:BBY) found its shares on the decline early Wednesday, after BofA Securities downgraded it to underperform from neutral, citing a challenging environment for achieving earnings growth.
The firm expects a challenging environment for the retailer to achieve earnings growth in both the near term and medium term. Of note, the holiday shopping season is not tracking well for Best Buy categories per BofA credit and debit card data.
Analyst Elizabeth Suzuki and team cut earnings estimates on BBY to account for a challenging medium-term demand environment.
"With few positive catalysts for BBY shares in the next 12 months, we see relative upside to stocks in our coverage that have a more favorable macro cycle (such as auto aftermarket companies), a store expansion story (growth companies with white space), and/or that sell non-discretionary product."
BofA lowered its price objective on BBY to $69 from $80 based on a P/E of 10X off the FY24 EPS estimate.
Last month, Purolator announced a nationwide partnership with Best Buy as part of Purolator's plan to provide exceptional service to its customers this holiday season. The company also grew its workforce, added new agent partners to bring more shipping locations closer to consumers, expanded its fleet and rolled out more digital tools to make it quicker to send and track packages.
BBY shares slumped $2.25, or 2.7%, to $81.83 first thing Wednesday.
