Best Buy stock could climb 29% over the next year as electronics retailer tests membership program, Bank of America says
- Bank of America is forecasting a 29% rise in Best Buy stock over the next 12 months on earnings outlook and new initiatives.
- The investment bank on Wednesday raised its price target on the electronics retailer to $ 157 from $ 145.
- Best Buy’s initiatives include a pilot membership program.
- See more stories on the Insider business page.
Best Buy’s stock price could rise by nearly a third over the next 12 months, with initiatives such as a membership program having the potential to boost business for the electronics retailer, a declared Bank of America.
The investment bank raised its 12-month price target on Best Buy to $ 157 from $ 145 in a research note Wednesday after the release of the retailer’s second quarter earnings report. The 29% upside call is based on the stock’s closing price on Tuesday at $ 121.49.
Best Buy relies on initiatives to thrive, BofA said, noting that the retailer has offered updates on several of its plans, including “Best Buy Beta,” a pilot membership program that combines technical support and credit card programs with other benefits. This program was launched in April. The company is also testing prototype square footage stores and experimenting with a new type of factory outlet and continues to improve its supply chain and inventory.
BofA said the increase in Best Buy’s same-store sales forecast for fiscal 2022 is likely – and generally – conservative, saying the bank’s credit and debit spending tracking data indicates resilience in home-related categories even as coronavirus-related restrictions on businesses have eased. Best Buy expects the company’s same-store sales growth of 9% to 11% from its previous projection of 3% to 6% growth.
Best Buy on Tuesday reported adjusted second-quarter 2022 earnings of $ 2.78 per share, on a 20% increase in revenue to $ 11.85 billion. The results exceeded expectations of $ 1.85 per share and revenues of $ 11.49 billion in a survey of analysts Refinitiv. The force was broad by product category, led by home appliances and home theater items among consumer electronics, BofA said.
“We were also encouraged by management’s comments regarding the strong demand for services and continue to view BBY as consistent, high-quality growth with an attractive valuation, strong balance sheet and room for continued improvement,” said l analyst Elizabeth Suzuki in the note reiterating BofA’s buy note. on Best Buy.
Best Buy shares jumped 8.3% on Tuesday after the results were released. .