Jefferies Reiterates On Best Buy, Expects 'Strong Holiday' Results

Jefferies commented on Best Buy Co Inc (NYSE: BBY) Wednesday and reiterated its Buy rating and $46 price target.

Analyst Daniel Binder believed “Best Buy saw a strong holiday season supported by product cycles across the store including TV, mobile, gaming, computing and appliances.

"Our checks also point to improved product availability in mobile so we are optimistic that this can become a comp contributor in Q4. Other product cycles such as health & fitness, connected home and areas of strength in photography (DSLR and GoPro) should help as well.”

Binder raised his “reported US comp store sales estimate to 4 percent from 2 percent (closer to 3 percent if we exclude about a point benefit associated with the classification of revenue for the new mobile carrier installment billing plans). This brings our total company comp store sales increase to 3.1 percent, which includes a -2 percent comp for international.”

The firm also raised its “EPS estimate to $1.37 from $1.35 and continue to assume incentive comp will pressure EPS y-y. Guidance was for nearly flat revenue and comp store sales y-y and the Street is at 0.7 percent comp and $1.31."

Binder concluded that the stock is still attractive with valuation at 5.5x EV/Calendar 2015 EBITDA.

Best Buy recently traded at $38.36, up 2.43 percent.