Consumer electronics retailer Best Buy (BBY:NYE) is set to announce its fiscal first-quarter results for 2024 on May 25. However, analysts anticipate a challenging quarter for Best Buy stock, as macroeconomic challenges impact consumer spending and discretionary purchases, particularly in the electronics sector.
Q1 Expectations and Macroeconomic Pressures:
Best Buy previously warned investors about the ongoing macroeconomic pressures that would persist in the fiscal year 2024. The company projected a decline in comparable sales for the year, with the first quarter expected to face the greatest sales pressure. Analysts estimate that Best Buy’s Q1 FY24 revenue will decline approximately 11% year-over-year to $9.53 billion. Moreover, adjusted earnings per share (EPS) are forecasted to drop by 30% to $1.10, attributed to lower revenue and increased costs.
Impact on Online Sales and Consumer Trends:
Best Buy’s online sales, an important revenue stream, witnessed a decline in the fiscal first quarter. Based on website traffic, visits to bestbuy.com decreased by 27.2% year-over-year and nearly 8% sequentially. These figures reflect the weakness in Q1 FY24, highlighting subdued consumer demand for electronics. Citigroup analyst Steven Zaccone also expressed concerns about declining demand in the electronics and home furnishings sectors, based on industry commentary and spending trends.
Best Buy Stock-Analyst Predictions and Technical Indicators:
Zaccone cautioned that Best Buy and Williams-Sonoma may deliver disappointing comparable sales and revise their outlooks downward. While he acknowledged that both retailers have a track record of cost control, he lowered the price target for Best Buy stock to $62 and maintained a Sell rating. Technical indicators also suggest a Sell rating, with BBY’s 50-Day and 20-Day EMA signaling negative momentum.
Investor Sentiment and Conclusion:
Wall Street’s consensus analyst rating on Best Buy stock reflects caution, with three Buy, 12 Hold, and three Sell recommendations. The average price target of $81.37 implies a potential upside of 17% from current levels, although shares have declined 13% year-to-date.
The fiscal first-quarter results are expected to demonstrate the impact of macroeconomic challenges on the performance of Best Buy stock. While technical indicators and some analysts remain cautious, investors will closely watch the company’s strategies to navigate the evolving market conditions in the electronics industry.
