BBY) was recently downgraded from Neutral to Underperform.
The downgrade comes following dismal second quarter
2013 results. The quarterly earnings of $0.20 per share
fell 49% from year ago levels and missed the Zacks
Consensus Estimate of $0.31. Total revenue also
declined 2.8% to $10,547 million during the quarter.
Comparable-store sales fell 3.2%, reflecting decline of
1.6% at Domestic segment and 8.2% at International
Best Buy is a multinational specialty retailer of consumer
electronics, home office products, entertainment software,
appliances and related services. The company is facing mounting
pressure from online services that are able to offer products at lower
costs. The founder of the company, who owns approximately 20% of the
stock, is looking to take the company private with the help of private
We recently downgraded our long term recommendation on
the stock to Underperform from Neutral following the company's dismal
second-quarter 2013 results. Over the last five years, Best Buy's
shares have traded in a wide
range of 4.3X to 17.4X trailing 12-month earnings. Our
target price of $16.00 equates to a 4.6x multiple 2013 EPS.
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