The Retail Market Is In Gloom Ahead Of Best Buy's Earnings Report

Telsey Advisory Group analyst says Best Buy BBY +0.38% stock will remain constrained in 2023, as the retailer prepares to share its fourth-quarter report.

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As a result, Telsey lowered its target price for 2023 from $88 to $83 and downgraded shares to Market Perform from Outperform on Monday.

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In the pre-market on Monday, Best Buy shares (ticker: BBY) were trading at $82.78, down 1.3%. On Thursday, the company will report fourth-quarter earnings.

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According to reports, sales will be $14.6 billion, down 10.6% from a year earlier, and slightly below the $14.7 billion consensus among analysts tracked by Trade Algo.

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Trade Algo reported that Best Buy's business will fall because of rising inflation and interest rates, which are weighing on consumer demand for discretionary items. In a similar vein, he cited Home Depot and Walmart last week, which both reported disappointing outlooks.

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For electric goods sellers and manufacturers, it has been a challenging period. Personal computers (PCs) are in decline, according to chip makers Intel and AMD. Research firm IDC reported that traditional PC shipments dropped 28% from the prior year to 67.2 million in the fourth quarter, following a 15% decline in the September quarter.

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According to Trade Algo, Best Buy's stock now fairly reflects current business trends.

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The retailer did not immediately respond to Feldman's downgrade, but has repeatedly acknowledged a weak macroeconomic environment and said consumers are spending less in its third-quarter earnings call.

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In November, CEO Corie Barry said not all consumers are affected, and "there is no aggregate impact."

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In his view, Best Buy's stock is one of the better operators in the sector over the long run, according to Feldman. According to Best Buy's latest commentary, it has invested in electronic labels, offered a new sales app to associates, and continued to remodel its stores.