Best Buy (BBY:NYE), the consumer electronics retailer, is set to release its first-quarter fiscal 2024 results. Analysts anticipate a challenging quarter for the company, as macroeconomic factors impact consumer spending on discretionary items like electronics. In this post, we will examine the expectations for Best Buy’s Q1 results, consider the factors influencing its market performance, and evaluate whether BBY stock presents a favorable investment opportunity.
Q1 Expectations and Revenue Projections:
During its fiscal fourth-quarter results announcement in March, Best Buy alerted investors to ongoing macroeconomic pressures expected throughout the fiscal year 2024 (FY24). The company forecasted a decline in comparable sales for FY24, with the first quarter (Q1 FY24) anticipated to face the greatest sales pressure.
Analysts project Best Buy’s Q1 FY24 revenue to drop approximately 11% YoY to $9.53 billion. Additionally, adjusted earnings per share (EPS) are forecasted to plummet by 30% to $1.10 due to lower revenue and increased costs.
Online Weakness and Analyst Insights:
Best Buy experienced a decline in website visits during the fiscal first quarter. Visits to bestbuy.com decreased by 27.2% YoY and nearly 8% sequentially, indicating weakness in Q1 FY24. Given the significance of online sales for retailers like Best Buy, these numbers highlight the challenging environment faced by the company.
Citigroup analyst Steven Zaccone expressed caution regarding Best Buy and home furnishings retailer Williams-Sonoma, suggesting potentially disappointing comparable sales and downward revisions to their outlook. Zaccone attributed the softening demand for electronics and home furnishings to weaker spending trends observed in Citi credit card data and commentary from retail peers.
However, Zaccone noted that Best Buy’s and Williams-Sonoma’s history of cost control might help mitigate the impact on their bottom lines. While Zaccone lowered his price target for BBY stock to $62 and maintained a Sell rating, he also reduced the price target for Williams-Sonoma and reiterated a Hold rating.
Stock Analysis and Investor Perspective:
Technical indicators currently suggest a Sell for Best Buy. The 50-Day Exponential Moving Average (EMA) stands at $74.32, while the current price is $69.49. Similarly, the shorter 20-day EMA also signals a Sell.
Wall Street analysts hold a “Hold” consensus analyst rating for Best Buy, comprising three Buy ratings, 12 Holds, and three Sells. The average price target of $81.37 implies a potential upside of 17% from the current levels. However, BBY stock has experienced a decline of 13% year-to-date.
Conclusion:
Best Buy faces headwinds in its fiscal first-quarter results due to diminished consumer spending on discretionary products, coupled with increased costs. While technical indicators suggest a Sell, Wall Street analysts currently maintain a cautious stance on the BBY stock. Investors should monitor the company’s ability to navigate challenging market conditions and assess its long-term prospects before making investment decisions regarding BBY stock.
