Best Buy Co: Hold Rating Amid Growth Potential and Tariff Challenges

Best Buy Co (BBY – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Simeon Gutman from Morgan Stanley maintained a Hold rating on the stock and has a $75.00 price target.

Simeon Gutman has given his Hold rating due to a combination of factors impacting Best Buy Co’s stock. The potential for growth exists, particularly if a new product cycle can accelerate comparable sales growth and enhance operating leverage. However, the company faces significant challenges, including ongoing tariff risks that have led to a reduction in the company’s 2025 guidance. This guidance suggests flat comparable sales and EBIT margins year-over-year, which tempers the growth outlook.
Moreover, while initiatives like the Best Buy Marketplace and Ads could eventually bolster profitability, they are still in their nascent stages. The benefits from these initiatives are anticipated to materialize in the latter half of 2025 but are currently offset by unfavorable product margins, especially in lower-margin categories such as computing. Consequently, the upside potential is largely contingent on a robust product cycle that can drive top-line growth and improve market share, justifying the Hold rating as the risk/reward balance remains wide.

Based on the recent corporate insider activity of 60 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of BBY in relation to earlier this year.