JPMorgan analysts reiterated an Overweight rating on Best Buy (NYSE:BBY) with a price target of $111, adding the stock to its Analyst Focus List as a Value idea.
The analysts emphasized that investors may be underestimating several key factors influencing Best Buy’s potential, including the challenging cycle post-COVID, growing replacement demand, and advancements in computing technology that could drive a new adoption phase. They also highlighted the potential for key product categories like TVs (25% of the mix) and appliances (13%) to rebound positively with an improving home sales environment.
The analysts believe Best Buy’s profitability could significantly benefit from these trends, especially in higher-margin categories like warranties and memberships. Additionally, ongoing efficiency efforts will likely boost earnings per share. Despite investor focus on lower-risk, cyclical plays like Home Depot and Lowe’s, the analysts argue that Best Buy is positioned to benefit from rising replacement demand in 2025, driven by new tech adoption and increasing home sales. They also noted that Best Buy’s importance to vendors further supports its investment appeal.