Best Buy's Stock Drops After Credit Suisse Downgrade

Shares of Best Buy Co. Inc. slumped 2% in premarket trade Wednesday, after the consumer electronics retailer was downgraded at Credit Suisse, which cited concerns over slowing sales during the second half of the year. Analyst Seth Sigman cut his rating to neutral, after being at outperform for at least the last three years. He lowered his stock price target to $31, which is 6.3% above Tuesday's closing price of $29.17, from $36.50. Sigman said he is concerned that fiscal fourth-quarter same-store sales could turn negative--the FactSet consensus is for 1% growth--because of mobile sales may not improve as previously expected. Although Sigman wrote in a note to clients that he believes there is still "significant value" in the stock at current levels, he expects "a more difficult battle between controllable vs. uncontrollable factors this year, which creates uncertainty that may continue to limit upside to the stock in the near term." The stock, which closed at a four-month low on Tuesday, has lost 4.2% year to date through Tuesday, while the S&P 500 has gained 1.5%.

Copyright © 2016 MarketWatch, Inc.