Shares of the American multinational consumer electronics retailer, Best Buy, dropped more than 5% on Monday after Bank of America Merrill Lynch downgraded the stock’s rating to underperform (equivalent of a sell rating) from neutral – citing slowing industry growth trends and declining sales on key product categories such as TVs, Apple products and gaming.
Further, analysts at Bank of American Merrill Lynch slashed their price target by nearly 30% from $70 to $50 a share, after its gloomy December quarterly outlook missed street estimates.
Best Buy reported better-than-expected third quarter earnings by reporting an EPS of 9 cents and sales of $9.59 billion. But shares fell by 5.8% to $52.16 on Monday, thereby taking its losses for the quarter to more than 33% amid the key holiday shopping season.
Consumer electronics, including iPhones and computers, accounts for more than 50% of Best Buy's US revenues. But headwinds pertaining to iPhone sales and a new Apple and Amazon partnership ahead of the holiday shopping season, according to the Bank of America analysts, could further dent the sales figure of the company for the December quarter.