© Reuters. Lowe’s (LOW), Best Buy (BBY) Downgraded at Evercore ISI
By Senad Karaahmetovic
Evercore ISI analysts downgraded shares of Best Buy (NYSE:) and Lowe’s (NYSE:) to In Line from Outperform.
The analysts cut BBY stock as they believe that “comps could continue to run negative into 2023 as deflation sets in.” This is despite the analysts seeing Best Buy as a “well-managed company.” Therefore, the analysts cut the price target to $70 from $80 per share.
“Structurally, the company is prioritizing in all the needed initiatives to sustain operations beyond 2022. The key remains competitive positioning longer-term. Operating margins won’t remain at 4% forever – nor will the stock at only 9.7x our 2023e EPS of $6.75. That said, if transactions don’t improve in a deflationary CE market, EPS growth and margin expansion will stay muted and the multiple won’t expand much,” the analysts said in a client note.
The price target on LOW goes to $210 from $220 per share to reflect lowered, below consensus EPS estimates for 2023.
“LOW’s remains an attractive business in a favored sector of retail. But risk to 2023 estimates and outperformance of peers HD, FND, and SHW in 2022 takes us to the sidelines while slowing macro could induce risk,” the analysts said in a note.
LOW and BBY shares are both down over 2% in pre-open Wednesday trading.
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