Best Buy Down by 14% Despite Reporting Better-Than-Expected Earnings

The shares of Best Buy are down by nearly 14% over the past 24 hours despite the retailer reporting better-than-expected quarterly earnings.

Best Buy Reports Excellent Quarterly Earnings

Best Buy, one of the leading retailers in the United States, reported its fiscal third-quarter earnings earlier today, and the company outperformed analysts’ expectations. The company’s earnings per share for the third quarter was $2.08 adjusted vs. $1.91 expected. Meanwhile, Best Buy generated $11.91 billion in the third quarter, surpassing analysts’ estimate of $11.58 billion during that period.

The consumer electronics retailer saw its sales jump during the pandemic as customers upgraded the technology hardware in their homes and offices to meet the demands of working from home. Best Buy said the trend continued in the last quarter, as home theaters and appliances lifted sales, in addition to smartphones.

The company’s net income was $499 million, or $2.00 per share, up from the $391 million, or $1.48 per share, reported in the same quarter last year. The net sales for Best Buy rose to $11.91 billion from $11.85 billion a year earlier, surpassing what Wall Street analysts had predicted.

BBY Down by Over 14%

The shares of Best Buy are down by 14% since the US market opened a few hours ago despite the company reporting strong quarterly earnings. The increase in shipping costs is something investors are worried about as they believe it could affect the prices of electronic products.

BBY stock chart. Source: FXEMPIRE

Furthermore, Wall Street analysts said Best Buy could record a decline in sales in the fourth quarter of the as consumers shift spending to other areas like travel and entertainment. This could force Best Buy to offer promotions on electronic gadgets despite the high supply chain costs.

BBY is trading at $118.61, down by 14% over the past few hours. Year-to-date, BBY has added more than 22% to its value, outperforming some of the other leading retailers in the United States. If the prediction pans out, then BBY’s value could drop below the $110 level over the coming days or weeks.

The 3 Things Investors Have to Know Today

The move eliminates a bit of uncertainty by maintaining the central bank leadership that investors are already familiar with, but it also eliminates the possibility of a more dovish Fed Governor Lael Brainard becoming the next Fed Chair.

Interest rate markets

The interest rate markets have reacted accordingly with odds of three interest rate hikes in 2022 now being the most popular bet. The 10-Year Treasury punched up beyond 1.60% and several of the bigger tech stocks took it on the chin as talks of higher interest rates circulate.

Higher interest rates have many inside the market thinking faster economic growth, where cyclical sectors like Financials tend to benefit. In other words, we might be seeing more “rotation” out of technology and into financials as we move towards year end.

There’s some buzz that tech stock valuations could see some compression if long-term interest rates increase, where as the financials would be a beneficiary. We can potentially see “tax-loss selling” .

Oil market

The oil market is also creating some rotation in capital as the U.S., China, Japan, India, and South Korea prepare for a coordinated release of supplies from strategic stockpiles. Not surprisingly, OPEC is not happy about this as the release of an estimated +35 million barrels from the U.S. alone could change the current supply-demand dynamics.

OPEC claims the release is unjustified and says it may need to reassess the amount of its monthly production increases. Some interpret this as a threat by OPEC to retaliate against global oil importers and not surprisingly is raising concerns about a global energy showdown that could send oil and other energy prices soaring even higher further out on the horizon. OPEC’s next production meeting is December 2.

Biden is expected to make an announcement in regard to the stockpile release today.

Data to watch today

In economic data, investors will be digesting preliminary reads from IHS Market for Manufacturing and Services PMI. Bulls are hoping to see more evidence that supply chain logjams are starting to clear after reports indicating that ports and shippers are starting to make some headway on the backlog along the West Coast. Data yesterday showed Existing Home Sales rose again in October, though total sales were down nearly -6% compared to last year.

At the same time, the median price for single-family homes rose +13.5% year-over-year to $360,800. It’s worth noting that at least part of the increase in the median sales price has been driven by a big jump in “luxury” home sales. By price category, sales of homes priced under $250,000 fell -24% year over year in October, while sales of homes priced between $750,000 and $1 million rose +25%, and sales of million-dollar plus homes were up +31%.

New Home Sales for October are due out on Wednesday followed by Pending Home Sales next Monday. On the earnings front, results are due today from American Eagle, Best Buy, Cracker Barrel, Dell, Dick’s Sporting Goods, Dollar Tree, The Gap, HP, JM Smucker, Medtronic, and Nordstrom. Tomorrow we have John Deere reporting earnings.

Best Buy Shares Slump Over 13% After Q4 Sales Forecast Disappoints

Best Buy shares slumped over 13% in pre-market trading on Tuesday after the Richfield, Minnesota consumer electronics retailer disappointed markets with a lower-than-expected comparable sales forecast for the fourth quarter.

According to Reuters news, Best Buy forecast comparable sales would fall between 2% and 1% in the fourth quarter, the midpoint of which is below expectations of 0.1% growth. Following that Best Buy shares slumped over 13% to $119.90 in pre-market trading on Tuesday.

Domestic revenue of $10.99 billion increased 1.2% versus last year. The increase was primarily driven by comparable sales growth of 2.0%, which was partially offset by the loss of revenue from permanent store closures in the past year, the company said.

Executive Comments

“We are looking forward to a strong holiday season and believe we are extremely well-positioned with both the tech customers want and fast and convenient ways to get it,” said Matt Bilunas, Best Buy CFO.

“We are committed to driving initiatives that will deliver future growth and our Q4 outlook reflects continued investments in our new membership program, technology, advertising and our health strategy.”

Best Buy Stock Price Forecast

Fourteen analysts who offered stock ratings for Best Buy in the last three months forecast the average price in 12 months of $136.31 with a high forecast of $157.00 and a low forecast of $100.00.

The average price target represents a -1.22% change from the last price of $138.00. From those 14 analysts, eight rated “Buy”, five rated “Hold” while one rated “Sell”, according to Tipranks.

Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.

Morgan Stanley gave the base target price of $120 with a high of $150 under a bull scenario and $85 under the worst-case scenario. The firm gave an “Equal-weight” rating on the consumer electronics retailer’s stock.

Several other analysts have also updated their stock outlook. Citigroup raised the price target to $118 from $100. Piper Sandler lifted the target price to $155 from $150.

Analyst Comments

Best Buy (BBY) is a best in class retailer led by a capable management team, and we are positive on the longer-term opportunity for the business and stock. BBY’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labour management, supply chain and omnichannel underpin our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We think BBY can sustain >5% EBIT margins after pulling forward its margin target by 5 years during the COVID-19 pandemic. This is reliant on generating SG&A efficiencies, which we believe are possible given BBY’s strong track record in this arena.”

Check out FX Empire’s earnings calendar

Best Stocks, Crypto, and ETFs to Watch – Deere and Co., Zoom and Bitcoin in Focus

Stocks

Deere and Co. (DE) heads a light holiday week calendar, with Wednesday’s pre-market report expected to show a profit of $3.87 per-share on $10.57 billion in revenue. The farm and construction machinery giant soared between March 2020’s pandemic low and May 2021’s all-time high at 400, underpinned by rapidly escalating agricultural prices and the transition into AI farming equipment, which will feature driverless combines, pickers, strippers, scrapers, seeders, and harvesters.

Zoom Interactive Communications Inc. (ZM) was the hottest stock in 2020’s momentum market, exploding to higher ground as workers were forced to lock down and conduct business remotely. Heightened competition and the end of those restrictions haven’t been kind to the company, which has dropped 57% since October 2020. Even so, it’s posted an impressive 369% return since the start of 2020. The company reports earnings after Monday’s closing bell.

Black Friday marks the start of the 2021 holiday season in the United States, with retailers offering deep discounts to attract floor traffic and eyeballs. Best Buy Co. (BBY) earnings on Tuesday will offer preview of sales expectations, which have been complicated by widespread supply disruptions. However, we learned during third quarter earnings that good companies are powering through these headwinds while bad companies are using them as excuses for poor performance.

Crypto

Bitcoin took a beating last week, dropping nearly 12% to a 5-week low. More importantly, the decline triggered a failed breakout above April’s high at 65,895, stoking fears the crypto king is forming a bearish double top pattern. However, many double tops yield more bullish patterns so let’s pull up a chair and see if the instrument finds support above the September swing  high  at 53,000, potentially heralding the last leg of a cup and handle breakout.

ETFs

iShares Russell-2000 Index Fund ETF (IWM) broke out above 7-month symmetrical triangle resistance at the start of November, lifting to an all-time high at 244.46 just 8-days later. It’s been pulling back since that time and is now approaching breakout support between 230 and 232. In turn, this predicts the decline will offer a low risk buying opportunity, ahead of higher prices into 2022.  The timing couldn’t be better, with positive small cap seasonality in force until the end of March.

For a look at today’s economic events, check out our earnings calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Earnings to Watch in Holiday-Shortened Week: Zoom, Medtronic, Best Buy, Dollar Tree and Deere in Focus

Earnings Calendar For The Week Of November 22

Monday (November 22)

IN THE SPOTLIGHT: ZOOM

The San Jose, California-based communications technology company Zoom is expected to report its fiscal third-quarter earnings of $1.09 per share, which represents year-over-year growth of over 10% from $0.99 per share seen in the same period a year ago.

The company, which provides video telephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of over 30% to $1.02 billion. Zoom will report 3Q FY22 earnings after market close on Monday, November 22.

“Investors lean cautious heading into FQ3 print given ongoing concerns around SMB churn, particularly as other WFH names have underperformed. View FQ4 print as having more favourable risk/reward, but given cautious positioning, could see outperformance if SMB churn is better than expected,” noted Meta Marshall, equity analyst at Morgan Stanley.

Zoom has established its position as the leader in video conferencing, now a growth market. The company has a meaningful competitive moat built on more than just architecture. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins are encouraging. Opportunities to expand the platform remain. Manageable churn post-COVID as a move to hybrid work setups.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 22

Ticker Company EPS Forecast
JKS JinkoSolar Holding Co. Ltd. ADR -$0.07
GRFS Grifolsbarcelona $0.29
JOBS 51job $4.45
GGAL Grupo Financiero Galicia $0.68
ZM Zoom Video Communications $1.09
A Agilent $1.18
KEYS Keysight Technologies $1.64
URBN Urban Outfitters $0.83
BMA Banco Macro $1.22
TLK Telekomunikasi Indns Tbk Prshn Pp Pt $0.46

Tuesday (November 23)

IN THE SPOTLIGHT: MEDTRONIC, BEST BUY, DOLLAR TREE

MEDTRONIC: The medical device company is expected to report its fiscal second-quarter earnings of $1.29 per share, which represents year-over-year growth of over 26% from $1.02 per share seen in the same period a year ago.

The company has beaten earnings per share (EPS) estimates all times in the last four quarters with a surprise of over 13%. The Fridley, Minnesota-based medical company would post revenue growth of nearly 4% to $7.9 billion.

Medtronic (MDT) commentary and guide should act as a barometer for MedTech recovery through the balance of ’21 and into ’22. More muted recovery through October could incrementally pressure 2FQ, with the path to 9% y/y FY22 growth looking increasingly challenging in the face of recent sector headwinds,” noted Cecilia Furlong, equity analyst at Morgan Stanley.

BEST BUY: The Richfield, Minnesota consumer electronics retailer is expected to report its fiscal third-quarter earnings of $1.93 per share, which represents a year-over-year decline of over 6% from $2.06 per share seen in the same period a year ago.

The consumer electronics retailer’s revenue would decline 2.5% to $11.56 billion down from $11.85 billion a year earlier. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Market looking for a 4-5% comp in Q3 vs cons at -1.5%. We see upside to 2H’21 numbers and expect a raised full-year guide as demand remains strong. That said, momentum is slowing and the category could shrink in ’22/’23. The stock is +15% in the last month, and a Q3 beat and raise seems priced in,” noted Simeon Gutman, equity analyst at Morgan Stanley.

DOLLAR TREE: The Chesapeake, Virginia-based company is expected to report earnings of $0.96 per share in the third quarter, down over 30% from $1.39 per share seen in the same period a year ago. But the discount variety stores that sells items for $1 or less would post revenue growth of nearly 4% to $6.4 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 23

Ticker Company EPS Forecast
CPG Compass Group £17.93
BYG Big Yellow £19.26
MDT Medtronic $1.29
BBY Best Buy $1.93
DLTR Dollar Tree $0.96
J Jacobs Engineering Group Inc $1.57
BURL Burlington Stores $1.24
SJM J.M. Smucker $2.04
DKS Dick’s Sporting Goods $2.03
PLAN Progressive Planet -$0.11
AEO American Eagle Outfitters $0.60
ANF Abercrombie & Fitch $0.65
DY Dycom Industries $0.75
JWN Nordstrom $0.56
NOAH Noah $2.95
VMW VMware $1.54
HPQ HP $0.88
GME GameStop -$0.51
CPB Campbell Soup $0.81
GPS Gap $0.50
SVT Severn Trent £49.79

Wednesday (November 24)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal fourth-quarter earnings of $3.92 per share, which represents year-over-year growth of over 64% from $2.39 per share seen in the same period a year ago.

The agricultural, construction and forestry equipment manufacturer would post revenue growth of more than 20% to $10.5 billion. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Despite positive secular demand fundamentals within both the Ag and Construction businesses we are lowering near-term estimates for Deere (DE) (F4Q21/F1Q22) to better reflect the impact from lost production in the US stemming from supplier bottlenecks and the labour strike,” noted Stephen Volkmann, equity analyst at Jefferies.

“We assume any lost production elongates the cycle, and we maintain our above Consensus estimates for 2023 noting additional upside from the infrastructure bill has yet to be factored into outlooks.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 24

Ticker Company EPS Forecast
UU United Utilities £25.21
JMAT Johnson Matthey £44.57
BVIC Britvic £31.37
DE Deere & Company $3.92
TCOM Trip.com Group Ltd $0.11
KC Kutcho Copper -$1.53

Thursday (November 25)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Friday (November 26)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Best Buy Agrees To Acquire Current Health As It Expands Into Healthcare

Best Buy is looking to enter the healthcare strategy ecosystem after agreeing to acquire UK-based Current Health.

Best Buy Set To Acquire Current Health

Leading retailer Best Buy has announced earlier today that it has agreed to acquire U.K. tech company Current Health. The financial terms of the deal are yet to be disclosed, but Best Buy is now looking to become a major player in the health sector.

By acquiring Current Health, Best Buy will enter the healthcare strategy ecosystem and provide services such as remote patient monitoring and telehealth. The retailer said it intends to close the deal by the end of its current fiscal year.

This latest development doesn’t come as a surprise as CEO Corie Barry has on numerous occasions described the healthcare sector as a growth opportunity. She has highlighted numerous trends in the sector that she believes would work in the retailer’s favor.

Current Health CEO Christopher McCann stated that he is excited that the company has been acquired by Best Buy. Best Buy’s reach with stores and its trust with customers will ensure Current Health’s products will reach more people. “Over the coming decade, significantly more healthcare can be delivered in the home,” the CEO added.

Deborah Di Sanzo, president of Best Buy Health, pointed out that Current Health has unique expertise in helping its customers’ leverage technology to work for them from anywhere. “The future of consumer technology is directly connected to the future of healthcare,” Di Sanzo added.

bestbuy
BBY Stock chart. Source: FXEMPIRE

BBY Up By Less Than 1%

Current Health’s technology makes it possible for healthcare organizations to easily monitor their patients while at home. It leverages data from biosensors like wearable devices to give the medical personnel insights into a patient’s medical condition and to flag if immediate attention is required.

BBY is currently up by 0.5% following the earlier announcement. The stock is trading at $109.22 per share and is up by 11.5% since the start of the year.

Better Times Ahead for Best Buy Shareholders

Best Buy Co. Inc. (BBY) rallied more than 5% on Monday, lifting off a six-month low after bullish analyst commentary. The appliance and electronics chain has underperformed major benchmarks so far in 2021, gaining about 10% while stuck within a massive consolidation pattern stretching back to August of last year. That performance matches the stock’s 2020 return, which was less impressive than a broad swatch of equally-sized retailers.

Delta Fears Weigh on Price Action

Shareholders were looking forward to better times after Best Buy blew away Q2 estimates in the August report, posting a profit of $2.98 per-share on $11.85 billion in revenue. Higher Q3 and fiscal year 2022 guidance set off an immediate wave of buying interest, lifting the stock more than 8% overnight. However, Delta fears then took control, generating an immediate reversal and persistent decline that shed more than 20 points in just five weeks.

Piper Sandler analyst Peter Keith raised his form’s target to $150 on Monday, noting “Based on our analysis, we believe BBY Total Tech can result in a ~3% comp growth lift and 5-8% EPS growth in each of CY22 and CY23. Our analysis assumes that (1) BBY at least doubles its member count over the next 2 years (from 3M to 6M+), (2) New Total Tech members spend an incremental $400-500 with Best Buy each year (which we think is likely ~2 incremental purchases), and (3) Contribution margin from Total Tech revenue is 10-15%.”

Wall Street and Technical Outlook

Wall Street consensus eased along with price over the summer, yielding an ‘Overweight’ rating based upon 10 ‘Buy’, 3 ‘Overweight’, 14 ‘Hold’, and 1 ‘Underweight’ recommendation. Two analysts recommend that shareholders close positions. Price targets currently range from a low of $80 to a Street-high $157 while the stock is set to open Tuesday’s session about $23 below the median $134 target. This placement should support high prices in coming weeks.

Best Buy topped out near 80 in August 2018 and entered a broad trading range with support in the upper 40s. It completed a breakout in July 2020, lifting into 125 in November. That peak has marked resistance for the last 11 months, with four failed breakout attempts weighing heavily on investor sentiment. The stock broke five-month support during the summer decline but has now remounted that barrier, predicting that pullbacks to 105 will offer low risk buying opportunities.

For a look at today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Today’s Market Wrap Up and a Glimpse Into Wednesday

Stocks extended their gains on Tuesday, with the S&P 500 and Nasdaq finding their way back to record ground. The Nasdaq is now hovering above the 15K threshold. The Dow Jones Industrial Average also finished the day in the green. The S&P 500 is up about 19% year-to-date.

Investors are feeling optimistic now that the FDA has formally approved Pfizer’s COVID-19 vaccine. If a greater percentage of the U.S. population gets vaccinated, it would likely bode well for the economy.  Plus the spread of the delta variant is beginning to show signs of weakening.

Wall Street expects the bulls to stay in control for the rest of the year. Wells Fargo strategist Chris Harvey raised his S&P 500 year-end forecast from 3,850 to 4,825, according to CNBC.

The oil price was also higher on the day, rising more than 3% to hover above the USD 71 threshold once again.

Stocks to Watch

  • Shares of electronics retailer Best Buy soared 8% on the day after the company’s top and bottom-line results surpassed Wall Street estimates. The company also lifted its full-year revenue forecast amid strengthening demand for its products and a return to in-store shopping.
  • Cybersecurity firm Crowdstrike Holdings saw its shares climb 8% higher after the stock made its way onto the Nasdaq 100 index.
  • Shares of Shanghai-based e-commerce giant JD.com skyrocketed 14% higher on Tuesday on the heels of a 26% jump in Q2 sales to USD 39 billion. The company expects to get through the Chinese government’s tech crackdown unscathed, unlike its competitor Alibaba, whose revenues took a hit as a result.
  • GameStop saw its value balloon by more than one-quarter on the day on solid volume as retail investors made bullish bets.
  • Shares of clothing retailer Urban Outfitters fell 5% in after-hours trading even though the company’s Q2 earnings and revenue results beat analysts’ estimates.

Look Ahead

Durable goods orders for the month of July will be released on Wednesday. Wells Fargo economists predict that there was a decline of 1.2% amid “a slowing in transportation orders.” Excluding transportation, they forecast a modest increase of 0.5%.

All eyes are on the Fed’s upcoming Jackson Hole economic summit on Friday, the theme of which is “Macroeconomic Policy in an Uneven Economy” and which will be held virtually this year.

Best Buy Becomes The Latest Retailer To Post Better-Than-Expected Quarterly Result

American retail giants have been posting better-than-expected quarterly results, and Best Buy has just joined the club.

Best Buy’s Earnings Surpass Analysts’ Estimate

Best Buy has become the latest American retailer to report excellent quarterly earnings results. The company announced its second fiscal quarter earnings earlier today, and its performance was beyond what Wall Street had expected.

Best Buy’s revenue for the second quarter of the year was $11.85 billion, surpassing the $11.49 billion that analysts had estimated. The net income surged by $734 million, or $2.90 per share, which is nearly twice the $432 million, or $1.65 per share it reported in the same quarter last year.

The company’s adjusted earnings for the second quarter were $2.98, which is significantly higher than the $1.85 expected by analysts surveyed by Refinitiv. Best Buy added that it expects revenue for the current fiscal year to be between $51 billion and $52 billion, while same-store sales growth could range from 9% to 11%.

In the current quarter, Best Buy predicts that it will generate between $11.4 billion and $11.6 billion, and its same-store sales could decline by 1-3%. CEO Corie Barry stated that “Over the longer term, we are fundamentally in a stronger position than we expected just two years ago. There has been a dramatic and structural increase in the need for technology.”

Best Buy is the latest US retail giant to post excellent quarterly earnings reports. Last week, Macy’s delivered its quarterly earnings report, and it was better-than-expected. Target and Walmart were the other two large retailers that reported excellent quarterly earnings reports last week.

Best Buy’s Stock Price Up By 10%

The shares of Best Buy are up by over 10% so far today, thanks to the massive earnings report the company presented. Currently, BBY is trading at $123 per share, making it one of the top performers in the market today.

BBY stock chart. Source: FXEMPIRE

Year-to-date, BBY is up by roughly 30%. The stock started 2021 trading at $98 per share but has surged by over 20% to currently trade at $123.

Why Best Buy Stock Is Up by 7% Today

Best Buy Stock Rallies After Strong Quarterly Report

Shares of Best Buy gained strong upside momentum after the company released its second-quarter results. Best Buy reported revenue of $11.85 billion and GAAP earnings of $2.90 per share, beating analyst estimates on both earnings and revenue.

Best Buy stated that comparable sales grew by 20% while operating income increased by 40% compared to the previous year. The company added that results also looked strong compared to results reached back in 2019.

Best Buy noted that demand for technology products and services remained strong. In addition, demand was supported by higher wages, government stimulus and high savings levels.

Best Buy expects that customer demand will stay strong and is raising its outlook for the year, expecting that comparable sales will grow by 9% – 11% compared to the previous estimate which called for growth of 3% – 6%.

In the third quarter, Best Buy expects to report revenue of $11.4 billion – $11.6 billion. Comparable sales are projected to decline by 1% – 3%.

What’s Next For Best Buy Stock?

Currently, analysts expect that Best Buy will report earnings of $8.28 per share this year and $8.49 per share next year. Analyst estimates have been trending higher in recent months, and it looks that they will continue to grow after the strong quarterly report.

The stock is trading at 14 forward P/E which is not extremely cheap for a company in this segment, but valuations are high as S&P 500 is at all-time high levels. There is some potential for multiple expansion, especially if earnings estimates continue to move higher.

The second-quarter report indicated that consumer demand remained strong, and the company’s performance looked good even in comparison with the pre-pandemic year 2019. In this light, the stock should have a good chance to get closer to all-tme high levels near $128.50 which were reached back in May 2020.

For a look at all of today’s economic events, check out our economic calendar.

Best Buy Blows Away Q2 Estimates

Best Buy Co. Inc. (BBY) is trading higher by more than 4% in Tuesday’s pre-market session after blowing away Q2 2021 top and bottom line estimates. The electronics and appliance retailer posted a profit of $2.98 per-share during the quarter, $1.09 higher than expectations, while revenue rose a healthy 19.6% year-over-year to $11.85 billion, beating consensus by more than $300 million. The company raised both Q3 and fiscal year 2021 guidance, indicating robust sales across all major categories.

A Year of Sub Par Performance

Even so, the stock has gone nowhere in the last 12-months, trading at the same price level first struck on this date last year. It more than doubled off the March low to reach that lofty level, setting off long-term overbought technical readings that are still impacting performance.  Of course, we’ve seen this story play out with other American retailers this year, translating into sub-par returns at big names that include Amazon.com Inc. (AMZN) and Walmart Inc. (WMT).

Best Buy’s long-term outlook remains highly bullish despite a year of sideways action, with Telsey Advisory Group analyst Joseph Feldman noting that “We expect Best Buy to further strengthen its position, with steady market share gains, stable profitability, leading Omni-channel capabilities, solid cash flow generation, a healthy balance sheet, and a strong management team. Despite all these positives, Best Buy’s valuation remains relatively inexpensive.”

Wall Street and Technical Outlook

Wall Street consensus has eased to an ‘Overweight’ rating in the last three months, based upon 10 ‘Buy’, 3 ‘Overweight’, 12 ‘Hold’, 1 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $77 to a Street-high $150 while the stock is set to open Tuesday’s session about $10 below the median $127 target. The positive post-news reaction raises odds that price will make a beeline into the median target in coming sessions.

Best Buy topped out at 84.37 in August 2018 and cleared resistance at that level in July 2020. The subsequent rally was short-lived, stalling above 115 in November. February and May 2021 breakout attempts failed, reinforcing horizontal resistance that now stretches up to 128. The current uptick could enter that contested zone in coming sessions but a breakout will be difficult, given mixed price action in other big retailers.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Wall Street Week Ahead: Best Buy, Medtronic, Autodesk and Dollar General in Focus

Earnings Calendar For The Week Of August 23

Monday (August 23)

Ticker Company EPS Forecast
JD JD.com $2.69
EDU New Oriental Education Tech $0.02
RBREW Royal Unibrew A/S kr8.25
PANW Palo Alto Networks $1.43
GRUB GrubHub $0.27
MSNFY Minera Frisco ADR $0.01
TLK Telekomunikasi Indns Tbk Prshn Pp Pt $0.41
GPFOY Financiero Inbursa ADR $0.14
SUMO Sumo -$0.14
JOBS 51job $3.77
CBPO China Biologic $1.33
TV Grupo Televisa Sab $0.10

Tuesday (August 24)

IN THE SPOTLIGHT: BEST BUY, MEDTRONIC

BEST BUY: The Richfield, Minnesota consumer electronics retailer is expected to report its second-quarter earnings of $1.89 per share, which represents year-over-year growth of over 10% from $1.71 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 36%. The consumer electronics retailer would post year-over-year revenue growth of over 17% to $11.6 billion. According to ZACKS Research, full-year earnings to be at $8.53 per share and revenue of $49.56 billion, rising +7.84% and +4.86% year-over-year, respectively.

Best Buy (BBY) is a best-in-class retailer led by a capable management team, and we are positive on the longer-term opportunity for the business and stock. BBY’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labour management, supply chain and omnichannel underpin our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We think BBY can sustain >5% EBIT margins after pulling forward its margin target by 5 years during the COVID-19 pandemic. This is reliant on generating SG&A efficiencies, which we believe are possible given BBY’s strong track record in this arena.”

MEDTRONIC: An American-Irish medical device company, is expected to report its fiscal first-quarter earnings of $1.32 per share, which represents year-over-year growth of over 112% from $0.62 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 45%. The Fridley, Minnesota-based medical company would post year-over-year revenue growth of over 20% to $7.8 billion.

Medtronic is well aligned with our 2021 pro-recovery thesis, and we see sustainable 5%+ organic growth driven by the company’s ~5% WAMGR and supported by pipeline product launches & tuck-in M&A contributions (Micra AV, EV-ICD, EPIX, RDN, Zeus/Synergy, 780G, InPen, DTM, Interstim Micro, and the soft tisssue robot),” noted Cecilia Furlong, equity analyst at Morgan Stanley.

“CEO Geoff Martha has committed to initiatives to smooth bulk purchasing and deliver more consistent results and redeploy $450mn annual OpEx savings toward innovation & product reinvestment.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 24

Ticker Company EPS Forecast
BNS Scotiabank $1.90
BMO Bank Of Montreal USA $2.93
MDT Medtronic $1.32
BBY Best Buy $1.89
HTHT Huazhu Group Limited $1.04
INTU Intuit $1.59
HEI Heico $0.55
TOL Toll Brothers $1.49
URBN Urban Outfitters $0.78
JWN Nordstrom $0.27
VNET 21Vianet -$0.31
ACH Aluminum Of China $0.22

Wednesday (August 25)

IN THE SPOTLIGHT: AUTODESK

Autodesk, a leading provider of drafting and design software for the building, and infrastructure fields is expected to report its second-quarter earnings of $1.12 per share, which represents year-over-year growth of over 14% from $0.98 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 9%. The San Rafael, California-based company would post year-over-year revenue growth of over 15% to $1.05 billion.

For the fiscal second quarter, the company expects revenues between $1.045 billion and $1.06 million. The company expects non-GAAP earnings of $1.08-$1.14 per share.

“Upside in resellers’ Q2 performance & forward expectations increases confidence ADSK is on track to hit revenue & billings growth guides in FY22, despite a back-end loaded year. Our ests are towards the high-end of guidance & forecast achieving $2.4B FY23 FCF target. Resume coverage at a price target of $334,” noted Keith Weiss, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 25

Ticker Company EPS Forecast
SYDB Sydbank A/S kr5.70
ATHM Autohome $6.32
RY Royal Bank Of Canada $2.70
DKS Dick’s Sporting Goods $2.83
KC Kutcho Copper -$1.34
ADSK Autodesk $1.12
SPLK Splunk -$0.69
NTAP NetApp $0.95
BOX BOX $0.18
CRM Salesforce.com $0.92
ULTA Ulta Salon Cosmetics Fragrance $2.50
SNOW Intrawest Resorts -$0.15
WSM Williams Sonoma $2.59
ASND Ascendant Resources -$2.23
SHI SinOPEC Shanghai Petrochemical $1.23
LFC China Life $0.40
PTR Petrochina $1.13
BAVA Bavarian Nordic As kr0.57
PLAN Progressive Planet -$0.14
SMTC Semtech $0.62
DY Dycom Industries $0.74
RAVN Raven Industries $0.20

Thursday (August 26)

IN THE SPOTLIGHT: DOLLAR GENERAL

The U.S. largest discount retailer by the number of stores Dollar General is expected to report a profit of $2.59 in the second quarter, which represents a year-over-year decline of about 17% from $3.12 per share seen in the same quarter a year ago.

The company’s revenue would also decline 1.5% to 8.56 billion. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 9%.

“Dollar General (DG) is a best-in-class operator offering a rare combination of 1) consistent, high-quality top-and bottom-line results; 2) visible store growth; and 3) a shareholder-friendly capital allocation policy. Recent high-quality results add more confidence to the 10% L-T EPS growth algorithm, ramping top-line initiatives appear sustainable, and we see underappreciated margin upside from the rollout of Fresh self-distribution,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“DG’s valuation (high teens P/E multiple) presents a solid entry point as it is in line with its history despite much stronger EPS power (and below DG’s pre-COVID multiple) while a ~5x turn discount to the market. This seems unwarranted given DG’s consistent execution & outlook.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 26

Ticker Company EPS Forecast
BURL Burlington Stores $1.45
HAIN Hain Celestial $0.39
CM Canadian Imperial Bank Of Commerce USA $2.72
TD Toronto-Dominion Bank $1.53
SJM J.M. Smucker $1.88
ANF Abercrombie & Fitch $0.76
DLTR Dollar Tree $1.02
SAFM Sanderson Farms $6.38
LANC Lancaster Colony $1.31
COTY Coty -$0.06
DG Dollar General $2.59
PTON Peloton Interactive, Inc. -$0.44
HPQ HP $0.84
VMW VMware $1.65
WDAY Workday $0.78
GPS Gap $0.46
MRVL Marvell Technology $0.31

Friday (August 27)

Ticker Company EPS Forecast
ZNH China Southern Airlines -$0.77
CICHY China Construction Bank Corp $0.90
SNP China Petroleum Chemical $2.42
LEGN LEG Immobilien AG -$0.31
For a look at all of today’s economic events, check out our economic calendar.

Best Buy’s Q2 Earnings to Rise over 10%; Target Price $130

The Richfield, Minnesota consumer electronics retailer Best Buy is expected to report its second-quarter earnings of $1.89 per share, which represents year-over-year growth of over 10% from $1.71 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 36%. The consumer electronics retailer would post year-over-year revenue growth of over 17% to $11.6 billion.

According to ZACKS Research, full-year earnings to be at $8.53 per share and revenue of $49.56 billion, rising +7.84% and +4.86% year-over-year, respectively.

Best Buy shares have gained over 10% so far this year. The stocks ended 0.59% lower at $110.1 on Wednesday.

“We believe the company remains fundamentally undervalued and there could be room for gains in the stock going forward. Specifically, there is a 60% chance of a rise for BBY stock over the next month (twenty-one trading days) based on our machine learning analysis of trends in the stock price over the last ten years,” noted analysts at Trefis.

Analyst Comments

Best Buy (BBY) is a best-in-class retailer led by a capable management team, and we are positive on the longer-term opportunity for the business and stock. BBY’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labour management, supply chain and omnichannel underpin our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We think BBY can sustain >5% EBIT margins after pulling forward its margin target by 5 years during the COVID-19 pandemic. This is reliant on generating SG&A efficiencies, which we believe are possible given BBY’s strong track record in this arena.”

Best Buy Stock Price Forecast

Sixteen analysts who offered stock ratings for Best Buy in the last three months forecast the average price in 12 months of $130.75 with a high forecast of $150.00 and a low forecast of $109.00.

The average price target represents an 18.76% change from the last price of $110.10. From those 16 analysts, nine rated “Buy”, six rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $120 with a high of $152 under a bull scenario and $86 under the worst-case scenario. The firm gave an “Equal-weight” rating on consumer electronics retailer’s stock.

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $145 from $132. Raymond James lifted the price objective to $135 from $130. Guggenheim upped the target price to $135 from $130.

Check out FX Empire’s earnings calendar

Best Buy Shares Rise After Q1 Earnings Top Estimates; Target Price $150 in Best Case

Best Buy shares rose about 3% in pre-market trading on Thursday after the Richfield, Minnesota consumer electronics retailer reported better-than-expected earnings and lifted its annual sales forecast.

The company said domestic revenue increased 37.0% to $10.84 billion, largely driven by comparable sales growth of 37.9%, which was partially offset by the loss of revenue from permanent store closures in the past year. The was higher than the Wall Street consensus estimates of about $10.44 billion.

The U.S. retailer reported earnings per share of $2.23 per share, beating the market expectations of $1.34 per share.

Best Buy forecasts comparable sales growth of 3% to 6%, which compares to the prior outlook of -2%) to 1%. In the second quarter, comparable sales growth is expected to grow by nearly 17%.

Following this, Best Buy shares rose about 3% to $120.41 on Thursday. The stock rose over 17% so far this year.

Best Buy Stock Price Forecast

Eight analysts who offered stock ratings for Best Buy in the last three months forecast the average price in 12 months of $123.63 with a high forecast of $150.00 and a low forecast of $86.00.

The average price target represents a 2.37% increase from the last price of $120.77. Of those eight analysts, three rated “Buy”, four rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $115 with a high of $145 under a bull scenario and $82 under the worst-case scenario. The firm gave an “Equal-weight” rating on the consumer electronics retailer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $118 from $113. Raymond James upped the target price to $130 from $120. UBS lifted the target price to $130 from $120.

Analyst Comments

BBY is a best-in-class retailer led by a capable management team, and we are positive on the longer-term opportunity for the business and stock. BBY’s leading position in a healthy category and strength in key Retail fundamentals including merchandising, labor management, supply chain and omnichannel underpin our view,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We think BBY can sustain >5% EBIT margins after pulling forward its margin target by 5 years during the COVID-19 pandemic. This is reliant on generating SG&A efficiencies, which we believe are possible given BBY’s strong track record in this arena.”

Check out FX Empire’s earnings calendar