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We have maintained our long-term Neutral recommendation on Best Buy Company Inc. (BBY - Analyst Report) with a target price of $23.00 as risk reward remains fairly balanced for the stock at this juncture.

Why the Reiteration?

The company’s strategic initiatives, including its price match policy, multi channel strategy, lucrative assortments, multi-year cost reduction program and employee training is helping Best Buy in its turnaround process.

Best Buy posted fourth-quarter fiscal 2013 earnings of $1.64 per share that came ahead of the Zacks Consensus Estimate of $1.56. Total revenue of this Zacks Rank #3 (Hold) stock marked a marginal improvement to $16,711 million and came ahead the Zacks Consensus Estimate of $16,318 million. Moreover, the rate of fall in comparable-store sales decelerated to 0.8% from 1.3% in the prior-year period.

The company’s healthy online sales performance remains a positive as heightened competition from online retailers like Amazon.com Inc. (AMZN - Analyst Report), was adversely affecting its sales and profitability. During the last reported quarter, domestic segment’s online channel revenue jumped 11% to $1.3 billion, reflecting strong traffic.

Despite several initiatives taken by the company to uplift its performance, the first-quarter of fiscal 2014 remains challenged as domestic revenues will be pressured on account of Pre-Super Bowl sales shifting to the fourth-quarter of fiscal 2013. Moreover, adverse product and service mix, increased marketing expenses and its competitive pricing policies are likely to impact its results negatively.  

Other Stocks to Consider

However, until any further upward revision in the Zacks Rank on Best Buy, other stocks worth considering in the non-food retail sector include Macy’s Inc. (M - Analyst Report) and Cabela's Inc. (CAB - Analyst Report) both holding a favorable Zacks Rank #1 (Strong Buy). These companies are expected to continue with their upbeat performance.

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