Best Buy stock forecast: will strong demand continue?

What’s the Best Buy stock forecast for 2021 and beyond? Is uncertainty on the horizon?

The Best Buy stock forecast reflects the interesting shift that we’re seeing in consumer spending habits right now.

Best Buy's first-quarter results, which cover the 13 weeks to 1 May, showed better-than-expected earnings, with CEO Corie Barry declaring that “customer demand for technology products and services during the quarter was extraordinarily high”.

Even as the world begins to ease coronavirus restrictions, BBY stock predictions are proving resilient because of the lasting changes to purchasing trends that have now emerged. More of us are going to be working from home permanently and are actively investing in upgrading our properties as a result.

Barry added:

“This demand is being driven by continued focus on the home, which encompasses many aspects of our lives including working, learning, cooking, entertaining, redecorating and remodelling.”

BBY stock forecasts have also benefited from US President Joe Biden’s ambitious stimulus package to help consumers whose livelihoods have been affected by the coronavirus pandemic, with households receiving cheques designed to boost spending with hard-hit US retailers.

“It has become evident throughout the pandemic that technology is even more important to people’s lives, and we are excited about what that means for our business going forward,” Barry explained, noting that home-based working also requires higher levels of technical support, something that could deliver a healthy income stream for Best Buy.

Overall, sales grew by 37 per cent in the first quarter of the financial year. It wasn’t just home technology that drove the results, kitchen appliances sold well, too. Net sales came to $11.64bn, substantially more than the $10.4bn analysts were expecting. Earnings per share amounted to $2.23 on an adjusted basis, against the forecast figure of $1.39.

Although forecasts have been bumped up for the first half of this financial year, BBY stock predictions for the second half are harder to make right now. The retailer has acknowledged that as America’s states continue to remove restrictions on movement and hospitality, “shopping behaviour will evolve as customers are able to spend more time on activities like eating out, travelling and other events.”

Best Buy’s chief financial officer Matt Bilunas added:

“It is difficult to know exactly how that impacts our business, especially as we lap particularly strong sales in the back half of last year. Therefore, at this time, we are leaving our original FY22 back-half sales assumptions unchanged.”

Another interesting element in the Best Buy stock forecast is how the overall make-up of its customer base is beginning to shift. Millennials now make up the biggest chunk of its shoppers – and as well as being a little younger than before, the majority of shoppers at Best Buy tend to be female and on lower incomes.

How is Best Buy’s stock price performing?

The BBY stock price has enjoyed strong gains over the past 12 months. Since 1 June 2020, it’s risen by just over 50 per cent. 

Best Buy has stated that it has been making difficult decisions to keep up with the growing appetite for e-commerce as opposed to brick-and-mortar stores. The brand has closed around 40 of its bigger outlets over the last two years, but the transition to digital commerce is now being accelerated. The move could lead to approximately 5,000 full-time staff losing their jobs but would help to protect the razor-thin profit margins seen in this industry and make Best Buy more competitive on price. 

This doesn’t necessarily mean that physical stores are being rendered obsolete. In late May, the retailer announced plans for store employees to start assisting with “last-mile” deliveries – ensuring that products ordered online arrive at the customer’s door. A series of enhancements have been made to ensure that this initiative is more successful than a similar endeavour pursued by Walmart, which failed because workers had to use their own cars and had to make deliveries on top of their existing responsibilities.

Trade Best Buy - BBY stock price

Best Buy
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114.62
Low: 113.87
High: 115.96

FAQs

According to CNN Business, the BBY stock forecast for 2021 and the first half of 2022 looks upbeat. The median view from analysts suggests that we’ll see a 9.2% bump in Best Buy’s stock price to $126 over the next 12 months, which would fall just short of the stock’s all-time high of $128.58. Some analysts are even more optimistic about BBY’s prospects, setting a target of $150 – a 30 per cent increase. The lowest projection that’s been released warns of a 33.3 per cent fall from current levels to just $77, erasing the gains seen since June 2020.

The BBY stock forecasts is a rather mixed picture when it comes to recommendations about whether investors should buy or sell. While 12 have a Buy rating in force and one believes that BBY’s stock price has the potential to outperform the market this year, another 12 analysts are urging shareholders to hold the stock. Another two believe that BBY will underperform the market as COVID restrictions ease, and two recommend selling the stock now.

BBY does pay dividends every quarter, which have increased incrementally with every passing year. For each three-month period in 2019, Best Buy dividends stood at $0.50 – rising to $0.55 in 2020 and $0.70 in 2021.

The next dividend is scheduled to be paid on 8 July to shareholders who hold the stock at the close of business on 17 June. In an announcement, the board of directors said that 250,407,343 shares of common stock were issued and outstanding as of 1 May. This means that a total dividend of $175.3m will be shared among investors.

Best Buy’s presence on the stock market means that it is publicly traded. The retailer went public in 1985, making its debut on the New York Stock Exchange just two years later. Back then, BBY shares were available for around 10 cents each.

FURTHER READING

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