Why Best Buy's Turnaround Is Just Getting Started

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Best Buy (NYSE: BBY  ) climbed more than 3% today after Oppenheimer upgraded the consumer electronics retailer from perform to outperform.

So what: Along with the upgrade, analyst Brian Nagel raised his price target to $50 (from $36), representing about 20% worth of upside to yesterday's close. While contrarian investors might be turned off by the stock's massive run in 2013, Nagel believes Best Buy still has plenty of room to improve operationally and, in turn, to drive further price appreciation.

Now what: Oppenheimer expects Best Buy's top line to improve with renewed share buybacks helping boost the bottom line. "Under new management BBY is more focused on cost controls while working to improve the chain's competitive standing in CE Retail," noted Oppenheimer. "Shares have reacted very favorably to improving trends at BBY. We believe the BBY recovery still has substantial legs." But while Best Buy's fundamentals are certainly looking better, increasingly intense competitive pressure -- from both brick-and-mortar behemoths and online disruptors -- coupled with an already very hot stock price, makes the long-term bull case much less appealing.

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