Best Buy Earns a Double Upgrade at Citi

Citi analysts upgraded Best Buy (NYSE:BBY) to Buy from Sell, increasing their price target to $100 from $67 per share, citing a favorable catalyst trajectory.

The bank sees potential growth in Best Buy's earnings and valuation due to ongoing tech replacement cycles, new AI innovations driving additional demand, and solid margin execution.

Citi highlighted that Best Buy’s recent Q1/25 earnings demonstrated excellent gross margin execution, with internal drivers effectively countering external challenges such as increased promotional activity. This marked a pivotal shift from their previous negative outlook.

While acknowledging risks to same-store sales in the latter half of the year due to consumer uncertainty, election distractions, and a shorter holiday season, Citi remains optimistic. They believe Best Buy is nearing the end of its same-store sales declines and is close to a positive turnaround.

Citi also emphasized the importance of considering the long-term prospects as Best Buy's business returns to growth, presenting an attractive margin expansion narrative.