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Barclays downgrades Best Buy as demand for consumer electronics slows


The near-term outlook for Best Buy looks bleak as demand for consumer electronics slows, according to Barclays. Analyst Karen Short downgraded shares of the electronics retailer to equal weight from overweight after the company missed earnings estimates in its fiscal first quarter and lowered its guidance for the year . “Our main concern is that we believe 2H guidance remains optimistic, as does FY25 guidance from an operating margin standpoint (6.3%-6.8%),” Short wrote. “While BBY has multiple levers to reduce its expenses, such as labor and advertising, the company set a high bar, in our view,” she added. Like many retailers this earnings season , Best Buy is grappling with softening demand and soaring inflation. Short believes the challenging inflationary environment coupled with rising rates, and surging energy prices specifically means trouble for Best Buy’s low-end consumers. “These headwinds will likely be tough to mitigate for BBY, given the discretionary nature of its products and lack of its pricing power,” she wrote. Along with the downgrade, Barclays slashed its price target on Best Buy from $135 to $80 a share, which implies an 8.9% return from Tuesday’s close. Shares of the electronics retailer have plummeted 27.7% this year and 18.3% this month. Barclays also lowered earnings per share estimates. — CNBC’s Michael Bloom contributed reporting

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