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Best Buy's Post-Earnings Rally Leaves Shares More Evenly Balanced, UBS Says

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Best Buy's Post-Earnings Rally Leaves Shares More Evenly Balanced, UBS Says

Best Buy's (BBY) sharp rally following stronger-than-expected fiscal first-quarter results leaves the shares more evenly balanced in the near term, UBS Securities said in a report.

The electronics retailer on Thursday reported adjusted earnings of $1.28 a share in the three months ended May 2, up from $1.15 a year earlier, while revenue rose to $8.94 billion from $8.77 billion. Both topped Wall Street's estimates. The stock jumped 16% after the results and added 2.9% on Friday.

UBS said it still expects Best Buy to deliver outsized earnings growth of more than 7% and sees momentum continuing into May, helped by broad-based category gains and demand for newer products such as collectibles, wearables and AI glasses. Much of that optimism is now reflected in the stock, the report said.

Best Buy reaffirmed its fiscal 2027 outlook and appears to have left some cushion in its near-term guidance, UBS said. Even so, lapping last year's Nintendo Switch launch and uncertainty around new TV demand may keep the shares trading in a range, the report said.

Best Buy continues to show "it's a formidable specialty retailer that adapts well" to shifts in the consumer-electronics landscape, UBS said, adding that the CEO transition looming in November may contribute to a stop-and-start trading pattern.

UBS downgraded its rating on Best Buy to neutral from buy and increased its price target to $86 from $85. The shares have climbed 15% this year.

Price: $76.88, Change: $+2.14, Percent Change: +2.86%

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