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Analysts Remain Cautious on Near-Term, Despite Best Buy’s Expectations of Electronics Demand Recovery

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Shares of Best Buy (NYSE:BBY) experienced a slight decline following Tuesday’s strong gains, driven by a better-than-expected Q2 earnings report. Despite Best Buy’s confidence in the improvement of sales trends, analysts on Wall Street remain cautious about the near-term outlook.

During the earnings call, Best Buy CEO Corie Barry reiterated the company’s belief that the consumer electronics industry will stabilize and potentially grow next year, driven by natural upgrade and replacement cycles for technology purchased early in the pandemic. Best Buy aims to increase its market share in the consumer electronics sector.

However, analysts from Goldman Sachs, Morgan Stanley, and Bank of America maintain a cautious stance on Best Buy. Goldman Sachs applauds the improved sales performance in Q2 and anticipates margin expansion, but maintains a Neutral rating. Morgan Stanley highlights concerns regarding the timing of the electronics category rebound and potential margin management challenges, but raises its price target. Bank of America remains bearish on Best Buy due to its sales and EBIT returning to pre-pandemic levels, assigning an Underperform rating.

Analyst Marco Rodriguez on Seeking Alpha points out that while Best Buy has made improvements in various areas, its financials, valuation, and growth prospects do not currently support a buy recommendation.

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