Citi has initiated Best Buy (BBY) at HOLD with a target of $47. While that target is about a 10% premium to Best Buy’s current stock price, the bank sees too much competition from the discounters like Walmart (WMT) to get excited about BBY:
We are concerned that discounters such as [Walmart] WMT and [Target] TGT will now be offering services to its customers, once a competitive advantage of Best Buy. We think in a difficult macro environment consumers will be enticed by this and Best Buy could lose some share. A mere 10 bps change in share in either direction impacts BBY EPS by ~$0.07.
So what catalysts could make Citi more positive on BBY besides an economic recovery? If “a major competitor collapses.” Wethinks they’re looking at you, Circuit City (CC).
Citi initiates HOLD on Best Buy (BBY), target $47.
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