Please ensure Javascript is enabled for purposes of website accessibility

Why Best Buy Stock Jumped Today

By Evan Niu, CFA - May 18, 2020 at 1:44PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The electronics retailer got a bullish upgrade from Wall Street ahead of earnings this week.

What happened

Shares of Best Buy (BBY 0.66%) have jumped today, up by 10% as of 1 p.m. EDT, after the company received an upgrade from Wall Street. Telsey Advisory Group boosted its rating from market perform to outperform.

So what

Telsey analyst Joseph Feldman believes that Best Buy has handled the COVID-19 pandemic relatively well, especially when compared to other retailers. At the same time, the wholesale shift to remote work at many companies is driving demand for consumer electronics necessary to work from home, such as laptops and webcams for videoconferencing.

Customer checking out at a Best Buy

Image source: Best Buy.

Despite widespread store closures, Best Buy has been able to retain around 70% of its sales, according to Feldman. The company currently offers curbside pickup for online orders, in addition to home delivery. The analyst goes as far as to suggest that Best Buy will emerge from the crisis as "a winner in retail," thanks to market share gains, strong cash flow, and effective leadership.

Now what

Telsey boosted its price target on best Buy shares from $72 to $90, which is derived from a forward earnings multiple of 15. Feldman is modeling for earnings per share of $6 next year. Separately, UBS increased its price target from $74 to $80 while maintaining a neutral rating on the stock.

Looking ahead, the analyst is also encouraged about new gaming consoles that are scheduled to launch later this year, which should also boost Best Buy's gaming business. Best Buy reports first-quarter results on Thursday.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
BBY
$80.83 (0.66%) $0.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.