Best Buy (BBY) is seeing improving sales momentum amid factors such as continued replacement demand and emerging mini-product cycles, Truist Securities said Tuesday.
The brokerage expects the electronics retailer to post a 2.5% increase in its fiscal second-quarter domestic comparable sales when it reports results Aug. 27. Wall Street is looking for about 1% growth, according to Truist.
"We think the improvement is being driven by continued replacement demand, internal changes and emerging mini-product cycles," Truist analyst Scot Ciccarelli said in a note to clients.
While artificial intelligence usage is focused on phones and computers, expanding integration across other smart devices is broadening demand, the brokerage said. "As AI proliferates, we think we could see an accelerated adoption process for consumer hardware that would ultimately benefit Best Buy."
Truist upgraded its rating on the company's stock to buy from hold and raised its price target to $95 from $81. "While we view this rating change as tactical/trade-oriented, AI proliferation in consumer markets could result in a much longer runway," Ciccarelli said.
Best Buy shares were up 1% in Tuesday afternoon trade, bringing its year-to-date gains to 24%.
"If the company puts up a 2.5%-plus comp in (the second quarter), the 'market' will likely raise (second-half) expectations regardless of the company providing a conservative outlook," Ciccarelli wrote.
The brokerage expects continued replacement demand, appliance changes and several mini-product cycles to help drive more consistent positive comparable sales growth at Best Buy. "While all of these drivers are relatively modest today individually, we think that in aggregate, they should be enough to drive the company towards a more consistent (low- to mid-single-digit comparable sales growth) cadence for the next several quarters," Ciccarelli said.
Truist raised its earnings estimate for Best Buy to $6.70 a share from $6.65 for 2026 and to $7.15 from $7.10 for next year. The Street is projecting $6.55 and $7.02, respectively, according to the note.
Last week, the company appointed Anne Bramman as chief financial officer, effective Aug. 19, ahead of incoming Chief Executive Jason Bonfig, who will assume the role from Corie Barry Nov. 1.
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