Best Buy Added to JPMorgan’s Analyst Focus List

Analysts at JPMorgan have recently included Best Buy (NYSE:BBY) in their “Analyst Focus List,” highlighting a potential spike in demand for the electronics chain in 2025.

In a note issued to clients on Friday, the analysts suggested that Best Buy’s performance is likely to recover from COVID-era pressures and will benefit from the introduction of new computing products, along with a possible rebound in the housing market.

“While investors are rightfully focused on the lower-risk high-cyclical plays, we believe Best Buy sits in investors’ blind spot with replacement demand rising in 2025 given further time from the start of COVID, new computing technology in its early stages, and the sensitivity of TVs/appliances to housing turnover,” the analysts commented.

Furthermore, they pointed out that vendors rely on Best Buy, which represents an important endorsement for quality investors looking for higher beta names with cyclical upside.

In August, Best Buy raised its annual profit forecast and reported better-than-expected returns for its fiscal second quarter. The firm posted quarterly earnings per share of $1.34, exceeding consensus estimates of $1.16, and generated $9.29 billion in revenue, which was slightly higher than the projected $9.24 billion.

Sales Performance

• Enterprise comparable sales declined by 2.3%, an improvement from a 6.2% decline last year and better than the analyst expectation of a 3.17% drop.
• International comparable sales were down 1.8%, compared to the estimated decline of 2.22% and last year’s 5.4% dip.
• US comparable sales also fell by 2.3%, outperforming the estimated decline of 3.33%.

The gross margin held at 23.5%, matching analysts’ projections and slightly improving from 23.2% last year.

Future Outlook

Looking ahead, Best Buy has raised its annual earnings per share guidance to $6.10-$6.35, up from the previous range of $5.75-$6.20 and surpassing Wall Street forecasts of $6.08. However, the company also adjusted its full-year revenue outlook down to $41.3-$41.9 billion.