Best Buy (NYSE:BBY) was upgraded to “overweight” by Piper Jaffray (NYSE:PJC) on Monday as the firm grew optimistic in the retailer's ability to execute a successful turnaround.
Continue Reading Below
The upbeat note follows an upgrade to “buy” by Jefferies (NYSE:JEF) last week, which similarly expressed confidence in Best Buy's cost-cutting and business stabilization plans.
Best Buy’s founder and chairman, Richard Schulze, pulled his offer to take the company private earlier this month on the same day it posted stronger online sales and bested Wall Street estimates. Its shares have grown some 28% over the last 30 days.
The Richfield, Minn.-based consumer electronics retailer posted its biggest improvement in same-store sales in nearly three years last month and revealed robust holiday sales amid aggressive promotions such as online price matching and same-day pickup.
Meanwhile, Piper Jaffray analyst Peter Keith lifted his price target on Best Buy to $26 from $16.
“We believe new management is in the very early stages of a multi-year turnaround process that could drive substantial improvement to operating margin, ROIC and EPS,” Keith said.
Best Buy CEO Hubert Joly and CFO Sharon McCollam are bringing “a much needed focus and efficiency” to the company, while new department heads in IT, supply chain, e-commerce and streamlined retail management may help improve communication between corporate HQ and brick and mortar stores, he said.
Piper Jaffray maintained its fiscal 2013 earnings estimate of $2.33, which is above the consensus view of $2.13, but raised its fiscal 2013 outlook to $2.62 a share.