Image source: Best Buy.

There's some holiday cheer at Best Buy (BBY -0.81%) as we head into the juicy holiday shopping season. Shares of the consumer-electronics retailer surged 16.8% last week, moving higher after the company posted blowout earnings for its fiscal third quarter and painting a rosy picture for its telltale fiscal fourth quarter.

Revenue climbed 1.4% to $8.9 billion. That may not seem like much, but keep in mind that Best Buy has posted annual losses for five consecutive fiscal years. Coming through with an increase at all is notable, and this is the retailer's strongest year-over-year quarterly growth since late 2011. Best Buy has now rattled off back-to-back quarters of growth. This may not seem like the start of a turnaround, but at least it's a break from the slow bleed of customers that has plagued Best Buy in the past. 

Best Buy has been able to accomplish its top-line growth despite closing a few stores over the past year. The retailer's stateside stores posted a 1.8% uptick in comps, and its thinning international presence actually came through with even better same-store-sales growth. 

The news gets even better on the bottom line where adjusted earnings per share soared 51% to $0.62. Analysts were only holding out for a profit of $0.47 a share. 

Bucking the trend

Best Buy has been routinely landing ahead of Wall Street's earnings targets over the past year. The challenge at Best Buy has been sales, and that's starting to stabilize. Several analysts upgraded the stock or boosted their price targets on Best Buy's stock following last week's strong report, but the bullish fervor wasn't universal.

Wedbush analyst Michael Pachter is sticking to his "underperform" rating, and a $24.50 price target that suggests 45% of downside from here. Pachter is concerned that Best Buy doesn't plan to issue a press release detailing its holiday sales the way it has in the past, something that hints at potential weakness. Best Buy's own guidance suggests flat comps on a smaller store base during its fiscal fourth quarter. 

UBS analyst Michael Lasser did boost his price target from $38 to $47, but he stuck to his "neutral" rating. Lasser is impressed by Best Buy's ability to gain market share during the third quarter, but he feels that the stock is fairly valued at this point. Even some of the more bullish Wall Street pros have price targets in the high $40s, limiting the near-term upside.

Best Buy has held up well in recent quarters, but its guarded outlook for continuing store-level growth during the seasonally significant holiday quarter should give bulls pause here. Last week's rally was encouraging and well earned, but it's biggest test awaits in the weeks to come.